and Costco Wholesale Corp., is expected Thursday to call for new laws blocking manufacturers from setting minimum prices on everything from flat-screen TVs to power drills.
If the seller is an authorized dealer of the product in question (which means it is bound to honor a MAP agreement), it gets a notice from the manufacturer or NetEnforcers and typically brings its price into line within hours, the company says.In October, for instance, NetEnforcers found that discounter Buy.com Inc.
Both sites said they raised their prices to MAP levels.Manufacturers have been racing to enforce minimum-pricing policies since last year, when the Supreme Court ruled them to be legal, and not a violation of antitrust law.
EBay and a group of other retailers and antitrust advocates are meeting Thursday in Washington to craft a strategy to overturn that ruling.Manufacturers say minimum-pricing requirements are good because they protect a brand’s image from being tarnished by discounting, while helping retailers make enough profit to pay for customer service.
and HomeCenter.com have sued seven manufacturers with MAP or similar price-maintenance policies, alleging antitrust violations.Discounting, of course, remains a fixture on the retail landscape — particularly in this year’s holiday shopping season, due to the weak economy.
MAP agreements don’t cover all products and sometimes manufacturers grant exceptions.
Typically the agreements apply to high-end goods, electronics and new product lines that manufacturers don’t want to see tarnished by immediate discounting.
Stuart Bennett, NetEnforcers’ head of sales, says the Supreme Court ruling helped him land 40 new clients the past year, bringing the total to about 140.Rival firms include MAPtrackers Inc., Cyveillance Inc.
and Brand Protection Agency.Klipsch Audio Technologies Inc., an Indianapolis audio-equipment maker, says in the past it prevented discounting by unauthorized dealers by suing them and terminating contracts with authorized dealer that provided the discounters without Klipsch’s consent.
Over the past three years, Klipsch broke off its relationship with nearly 20 authorized dealers following lawsuits like these.But Mike Klipsch, the company’s president, says he now uses NetEnforcers because it is a less expensive way to go.Mr.
Klipsch says so far this year NetEnforcers succeeded in eliminating 1,420 instances of sellers’ listing below MAP online.It’s one thing to establish a MAP policy, Mr.
Klipsch says, but when you go after the bad guys with a company like NetEnforcers you’re showing your retail partners a zero-tolerance policy for any price violations.Tod Cohen, eBay’s vice-president of global government relations, says manufacturers and agencies like NetEnforcers are increasingly getting more aggressive policing the prices of our sellers.
They take down the Web sites only of the unauthorized resellers that are selling at discounts, but don’t bother other unauthorized sellers if they’re selling at MAP.
This suggests manufacturers are mainly interested in keeping prices up, not preventing trademark violations.
We feel that consumers will ultimately suffer, and we feel that they do deserve the best and most competitive price they can get.NetEnforcers would discuss violation totals at only two other sites with significant numbers of below-MAP deals or unauthorized dealers — iOffer.com and Craigslist.com.
It said the two sites totaled 51,280 individual pricing violations this year through Oct.
The removals are generally made within 12 to 24 hours following receipt of take-down notices, says Chief Executive Ryan Boyce.Jim Buckmaster, Craigslist’s chief executive, says the site has implemented its own protections against intellectual-property violations and also removes postings …
when they come to our attention.Joseph Loomis, the 32-year-old founder and chief executive of NetEnforcers, says clients pay it $1,500 to $100,000 per month, depending on the number of products being monitored.
Loomis says sometimes the company must make purchases from Web sites, and track the serial numbers of the products, so the manufacturer can figure out which warehouse or retailer the products originated from to determine how the goods reached an unauthorized dealer.Mr.
Loomis, a former Naval intelligence agent, says the idea for NetEnforcers was conceived about six years ago while he was working as an electrical engineer for a car-stereo manufacturer.
Annoyed by a growing number of unauthorized dealers discounting its products, company executives asked Mr.
Loomis to devise a way to catch them.He developed software to track the company’s authorized dealers and prices.
In 2003, he launched NetEnforcers using similar software.Every business day, about 20 NetEnforcer staffers scour the Web from cubicles in Phoenix and another site in Gainesville, Fla.
Using computers pre-loaded with information on the products and prices clients want checked, the staffers, dubbed enforcers, type in names and model numbers, one product at a time.In Phoenix one October afternoon, Web pages listing clients’ products at below MAP were popping up often on enforcers’ screens.
Sites containing apparent violations would get forwarded to Danielle DiDio, a customer-service representative, whose job it is to notify the manufacturers.
The manufacturers or NetEnforcers then contact the retailer to ask it to raise its prices.By day’s end, NetEnforcers had spotted a Panasonic home-theater projector listed by Buy.com at $43,208.99, well below the MAP price of $49,000.
It also found discrepancies in two Black & Decker products listed by AceToolonline: a table saw with a MAP price of $169 listed at $162.24, and a heavy-duty battery pack for $129, $20 below MAP.Jeff Wisot, vice president of marketing for Buy.com, which is an authorized Panasonic dealer, says his company quickly increased the price to MAP.
He called the discounted price an oversight and nothing deliberate on our part.
He said the company can’t afford to be deauthorized as a dealer and could also lose manufacturers’ support for advertising if it violates MAP.AceToolonline also says it raised its prices to match MAP.
I just wish that the competition also followed MAP, she says.A Black & Decker spokesman said the company sets MAPs on certain of its high-end brands.Some retailers try to circumvent pricing restrictions by listing a product at the MAP price but telling shoppers to click an additional button — or to add the product to their shopping cart — to see a discount price.Indeed, circuit City’s online price for the TV moved up to the $1,699 MAP level soon after NetEnforcers noticed the lower price.
Clicking on that opened another window displaying a discounted price of $1,439.99.NetEnforcers collected evidence for the Korean manufacturer, say people familiar with the matter.







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