Minimum Advertised Pricing (MAP) policies prohibit resellers or dealers from advertising a manufacturer’s products below a certain minimum price. The primary purpose for implementing a MAP program is to promote fair competition across the manufacturer’s affiliate and dealer channels. MAP programs are critically important to manufacturers who sell their products on the internet in light of the extremely low costs of advertising in pay-per click, shopping comparison, and auction sites. Despite the value of MAP programs, significant legal concerns exist regarding establishment and enforcement of minimum advertised pricing policies for e-commerce companies.

Under U.S. Antitrust law, vertical price fixing agreements between manufacturers and their dealers are illegal. Accordingly, when implementing a MAP policy, it is critical to establish a policy that controls the price at which products can be advertised but not the ultimate price at which the products may be sold. The law is well settled that manufacturers may set suggested retail prices and that minimum advertised pricing policies are not per se illegal but will be analyzed by the courts under a rule of reason that considers all of the relevant circumstances. When developing a MAP program for e-commerce, I generally advise my clients to:

1. Act Unilaterally – Section 1 of the Sherman Act only applies to concerted action but does not apply to the unilateral establishment of a minimum advertised price by a manufacturer.

2. Regulate Advertisements Not Prices – the law is clear that agreements between manufacturers and dealers that fix the price at which products are to be sold are per se illegal. MAP policies should focus on advertised prices in paid search ads, shopping comparison ads, and internet landing pages but not in shopping carts or other point of sale interfaces.

3. Avoid involving dealers in policing activity.

4. Avoid coercive action regarding actual prices sold.

5. Treat all dealers equally and unilaterally terminate those that don’t comply.

The law involving minimum advertised pricing for e-commerce is in flux. Before adopting a policy, you should consult with an attorney experienced in antitrust and e-commerce law.