Issue link: https://www.e-digitaleditions.com/i/679551
6 FEDA News & Views Industry Insights MAP vs. MRP Are We on the Right Road? Jim Hanson, President jhanson@bestrestaurantequipment.com Best Restaurant Equipment & Design, Inc. W ell, we've all heard that if you don't know where you're going, any road will take you there. Sometimes in our industry that is how it feels. What I mean is that we say that we want to be more profi table as an industry but in practice we tend to have a hard time saying "NO" to any kind of order, profi table or not. It's been that way ever since I got into the business in 1974. Then along came the Internet and the emer- gence of the Internet deal- er. Soon after, online pric- ing dropped to extreme lows and the howls from dealers came from every- where. "Do something," they demanded, only to be thwarted by this pesky little issue called "anti- trust," which got everyone scratching their heads. Many thought this was never going to last. Who could live on these minute margins? Then, sales from Internet dealers exploded even more. Next, MAP or Minimum Advertised Pricing surfaced as the great hope. If a manufacturer would just prohibit its Internet dealers from advertising those crazy low prices, everything would be all better. Legal battles outside of our industry also created some case law that seemed to indicate that MAP was a legal way for a manufacturer to protect its reputation and pricing structure so that it could maintain its established distribu- tion channel and service levels. For the last dozen years or so, more and more manufacturers have studied and jumped in to try to "protect their services and distribution channel." It's just my point of view but I think they also do it to placate the multitude of brick-and-mortar fullservice dealers that add value to the customer and are still the manufacturer's mainstay. The prob- lem is that if they do go the route of MAP, they also MUST enforce it evenhand- edly—or risk legal challenges. It's no secret how FEDA's chair, Brad Pierce, feels about this, as he's been pretty vocal about his stance. Recently, he shared the following thoughts. "In terms of the teeth to the policies, or lack thereof," he says, "a lot of that is driven by legitimate legal concerns. There's very few policies in the industry that I'd term as completely legal and free of antitrust issues. Hatco happens to be one of them, which is ironic because MRP programs (discussed below) get extremely close to price fi xing—and if not prop- erly designed and administered, MRP can cross the price-fi xing line. "MRP policies are too close for comfort for most manufacturers, although there's a consensus from both manufacturers and dealers that 'MAP/MRP programs can be legal, except in a few states. But what the case law states is that they are no longer inherently illegal. That doesn't mean they're legal; it just means that they may or may not be depending upon where and how they are implemented. For instance, if a manufacturer enforces MAP and penalizes one dealer for a vio- lation and cuts them off for a period of time, but lets another dealer slide with a continued on page 30 For the last dozen years or so, more and more manufacturers have studied and jumped in to try to "protect their services and distribution channel."