minimum retail price policy (MRP)

[iassaf]

We are a new manufacturer and will be distributing to retail stores through a major distributor in the USA.

We are already seeing some online sellers advertising our product with large discounts, even before the have received our product. This will not be fair for regular shop who have larger overhead costs and provide better service.

I have discussed the issue with the distributer and they told me I should provide them with a minimum retail price policy (MRP) and they'll pass it along to the retailers.

I need an oponion on the legality of such policy.

Thanks,

 

[xylene]

We are already seeing some online sellers advertising our product with large discounts, even before the have received our product. This will not be fair for regular shop who have larger overhead costs and provide better service.

What do you care what is 'fair'?

Is price competition going to be hurting your profits?

Online vs brick and mortar is nothing new.

I would think that an onerous price policy would be more harmful.

 

[iassaf]

It will hurt our sales!

Online is a small part of the retail chain. The regular stores will not carry the product if they see it selling so low online.

 

[xylene]

It will hurt our sales!

Online is a small part of the retail chain. The regular stores will not carry the product if they see it selling so low online.

Then the problem is your distributor.

ADDED

And you are changing your rationale.

 

[FlyingRon]

A "policy" means squat really.
If you have a contract with the distributor and he in turn has contracts with the retailer, then you might have something enforceable, otherwise, all you can do is cut off the supply to those who won't play with your idea of fairness.

 

[mistoffolees]

A "policy" means squat really.
If you have a contract with the distributor and he in turn has contracts with the retailer, then you might have something enforceable, otherwise, all you can do is cut off the supply to those who won't play with your idea of fairness.

Unless the contract is found to be unenforceable due to antitrust laws.

I'd suggest having the contract reviewed by an attorney first.

 

[FlyingRon]

Unless the contract is found to be unenforceable due to antitrust laws.

I'd suggest having the contract reviewed by an attorney first.

I said "might."

 

[teflon_jones]

MRP's are standard and legal everywhere in the US. You just need to enforce the policy fairly across all buyers.

 

[justalayman]

simple solution: don't sell to sellers that use online sales systems only. You can control who is allowed to retail your product so do so.

 

[mistoffolees]

MRP's are standard and legal everywhere in the US. You just need to enforce the policy fairly across all buyers.

That is not true.

With the most recent Supreme Court decision (Leegin, 2007), it was found that minimum price agreements are not PER SE illegal, but that they may be illegal - as judged on a case by case basis using the rule of reason.
Suggested retail price - Wikipedia, the free encyclopedia

In addition, there are states where minimum pricing policies are per se illegal:
State Law Targets 'Minimum Pricing' - WSJ.com

Any minimum pricing agreement needs to be reviewed by an attorney familiar with antitrust law.