Maryland Ban on MAP Pricing Hits Oct 1st

Posted Thu Sep 17, 2009 at 08:00 AM PDT by Mike Attebery

State senate eliminates Minimum Advertised Pricing, consumers to benefit.

With a few months to spare before the biggest holiday of the year when it comes to buying good cheap gear – Black Friday – the Maryland senate has officially done away with manufacturer restrictions on Minimum Advertised Pricing (MAP).

MAP pricing, simply stated, is a price set by the manufacturer of an item which companies are not allowed to sell below. Sellers that violate MAP risk termination of selling rights, but starting October 1st, MAP will be considered illegal. In Maryland, anyway.

MAP could even be going away on a national level, as a similar ruling is considered in the US Senate. This pricing scheme is oft condemned of being a form of vertical price fixing.

For example: Company BB purchases televisions from Company SY for $1000 with the agreement that they will not sell the TV’s for under $3000. Company SY reaches this agreement with anyone who wants to buy their televisions, and voila, every TV from SY is selling at the same price.

While certainly the company in the example is able to sell the TV at a lower cost, as are all companies buying the sets, but they are unable to mark them down. As a result, the buyer, in order to get what they want, must pay the fixed price.

Without a minimum or maximum sell price from the manufacturer, retailers will be free to mark down products as they see fit, meaning that this could be a very good Black Friday for consumers in Maryland.

Source: CE Pro

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