A new Maryland state law that will go into effect on October 1 will prohibit agreements establishing minimum resale prices for goods or services, such as those between consumer electronics manufacturers and their retailers, wholesalers, and distributors.
Senate Bill 239 was passed in Spring 2009 by an overwhelming margin as an amendment to the Maryland Antitrust Act. The law states that minimum advertised pricing (MAP) is an “unreasonable restraint of trade.” On the federal level, legislation is pending in the U.S. Senate that would overturn the Supreme Court’s Leegin case, from October 2006, that allowed manufacturers to establish MAP. In the Leegin decision, the Supreme Court overturned a nearly century old antitrust rule forbidding vertical price fixing — the practice of a manufacturer setting a minimum price below which a retailer cannot sell the manufacturer’s product. Consumer rights advocates contend that MAP increases costs for consumers.
To assist manufacturers seeking an alternate approach, Vision Werks, in association with veteran consumer electronics lawyer Andy D’Amico, has formed a Unilateral Pricing Program to enable consumer product manufacturers to manage pricing variability and enhance brand equity throughout their distribution channels.
Johannesen noted that current economic conditions have driven many manufacturers to offset declining volume with expanded distribution. As a result, the industry is getting “squeezed” by predatory pricing. “Given our high tech products and custom installation, manufacturers should either have better discipline in finding the right dealers in the right places or a unilateral pricing policy.”
A UPP enables manufacturers to legally establish minimum resale prices, providing their resellers with sufficient margins for hiring and training staff to present and demo their brand attributes and unique product benefits.
Vision Werks will review a manufacturer’s existing policy and offer feedback about where it’s legal or illegal, and suggest modifications. Johannesen says that companies that are appropriate candidates for unilateral pricing programs are ones selling “value-added products” that require appropriate marketing, merchandising, and training support. “That is the whole idea behind having a unilateral minimum price,” he explained. “There is profitability in the channel, so that you’re able to appropriately support the customer.”