MAP Pricing: Supreme Court Ends 96-Year-Old Ban on Retail Price Floors

[mandy]

Striking down an antitrust rule nearly a century old, the Supreme Court ruled today that it is no longer automatically unlawful for manufacturers and distributors to agree on setting minimum retail prices.

The decision will give producers significantly more leeway, though not unlimited power, to dictate retail prices and to restrict the flexibility of discounters.

Five justices said the new rule could, in some instances, lead to more competition and better service. But four dissenting justices agreed with the submission of 37 states and consumer groups that the abandonment of the old rule would lead to significantly higher prices and less competition for consumer and other goods...

full article: http://www.nytimes.com/2007/06/29/busine...1340769600&en=0b4c106d96a846ae&ei=5088&partner=rssnyt&emc=rss

[mandy]

A related article:

Retailers have expressed concern that the ruling may make it more difficult for them, and discount retailers and online sellers may be impacted the hardest...

Some believe it will be harder for online sellers to acquire overstock/liquidation items from local businesses, a source of inventory for many. Let us know if you think the decision will hurt online sellers, and how...

full article: http://blog.auctionbytes.com/cgi-bin/blo...79026.html
and: http://www.auctionbytes.com/cab/abn/y07/m07/i02/s01

[mandy]

A related article:

Just as millions of consumers are turning to the web to find the lowest prices, online retailers in many categories find they no longer can compete on price. That’s because a growing number of manufacturers are setting minimum prices on their goods, and in some cases cutting off retailers who sell below those prices.

They are taking advantage of a June 2007 U.S. Supreme Court decision known as Leegin Creative Leather Products Inc. vs. PSKS Inc. that gives greater legal protection to such minimum pricing policies. While these policies are largely aimed at preventing online retailers from undercutting manufacturers’ traditional distribution channel, bricks-and-mortar stores, opinion is divided among online retailers. Some vigorously oppose these pricing policies because they reduce sales while others favor them because they improve profit margins.

Whatever their opinion, many online retailers are finding suppliers mandating minimum prices, particularly on higher-priced goods with strong brands. But manufacturers’ enforcement of these policies—often referred to as MAP, for minimum advertised price—has been uneven. Many online retailers complain that, while they abide by MAP pricing, their competitors do not...

full article: http://www.internetretailer.com/article.asp?id=28293

[mandy]

More:

The Federal Trade Commission will hold a series of four to six workshops starting in January to gather information on the impact of a controversial court decision that makes it easier for manufacturers to set minimum prices, polices that are largely aimed at online retailers that sell at steep discounts...

While manufacturers have largely focused enforcement of MAP rules against online retailers that sell at a discount, not all e-retailers are opposed to these minimum-price rules. “What happens on the Internet when there’s not a MAP policy in place, it takes retail prices down to unacceptable margins,” says David Craig, CEO of online-only retailer Rugs Direct...

full article: http://www.internetretailer.com/dailyNews.asp?id=28684

[mandy]

A related article:

And as with any rule, MAP is bound to be broken. Online retailers are already using “click to see price” in pop-up windows, “add to cart to see price” and “email for quote” tactics. Retailers who take the high road and adhere to MAP pricing often find themselves forced to lower prices to compete, or honoring price-matches once discounters run out of product.
Break MAP at Your Own Risk

Technically, concealing price from product pages is akin to a brick-and-mortar store showing one sticker price, and a salesperson verbally offering a price break to a customer in-store. It’s not an advertised price, nor a displayed price. But that raises the question — if it’s not advertised in email, PPC, shopping engine or other promotional material — is showing a sub-MAP price on a product page really “advertising”?

Retailers who walk this thin line must be careful not to let these prices slip through data feeds and into shopping engines, search engines or any other promotion. Even with diligence, it’s easy to get caught breaking MAP...

full article: http://www.getelastic.com/map-pricing/