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A Pennsylvania resident has sued a number of archery sellers, charging their use to minimum advertised pricing (MAP) policies amounts to price fixing.
MAP polices are unilateral agreements that prevent retailers from advertising a product below a specific price. They are designed to maintain pricing consistency across different retailers, support brand perception, and prevent price erosion.
ChannelSight, a maker of e-commerce personalization software, wrote in a blog entry, “A MAP policy is used to ensure an even playing field amongst retailers that want to drive margin or volume whilst ensuring that the brand's product is not devalued by a constant price-war.”
The lawsuit filed in the U.S. District Court for the District of Utah argues that the Archery Trade Association (ATA) conspired with numerous manufacturers, distributors and retailers, including Bass Pro and Dick’s Sporting Goods, to “to fix the prices of — and eliminate price discounting and competition for — archery products.”
The case argues that price competition among retailers is seen as an “existential threat” to the industry and claims that the ATA repeatedly pushed its members to jointly enforce MAP policies industry-wide, including encouraging dealers not to work with vendors who violate MAP policies.
The suit contends that the alleged agreement between the ATA and its members, as well as their coordinated enforcement of MAP policies, violates federal and state antitrust laws.
Court documents state, “First, by eliminating the ability of competing retailers to attract customers by publicly advertising lower retail prices, MAPs reduce retailers’ incentives to compete on price because those lower prices do not entice incremental business to shop at the retailer. Second, whatever limited incentives to offer discounts on retail prices remain after MAPs are adopted, MAPs set an artificially high retail price from which price negotiations are initiated, ensuring that actual transaction prices will be higher than would otherwise be the case.”
The lawsuit, seeking unspecified monetary damages and the end of such MAP actions, estimates there are hundreds of thousands of potential class members who have purchased relevant archery products since 2014.
MAP policies are seen as legal under U.S. federal antitrust law when implemented unilaterally by the manufacturer, or when a manufacturer informs a retailer of a MAP expectation but does not enter into agreements with them to fix prices. Tradevitality states, “This approach avoids violating the Sherman Antitrust Act, which prohibits price-fixing agreements. As long as a MAP policy is not part of a mutual agreement with resellers, it is generally lawful.”
MAP polices can be challenging to enforce by manufacturers, particularly on online marketplaces, and retailers can become vexed staying up-to-date on MAP changes and wanting more flexibility to discount slow sellers. However, they’re generally seen as beneficial to consumers by increasing trust in pricing.