Minimum Advertised Price (MAP) Policy

This MAP Policy will be effective as of February 1, 2016.

 

Effective February 1, 2016, KHS America, Inc. (“KHSA”) is revising and reissuing its Minimum Advertised Price (“MAP”) Policy for the musical instrument brands that KHSA distributes to dealers for resale in the United States of America to institutional and individual customers and covers with this MAP Policy (“Covered Brands”). KHSA has unilaterally written this revised MAP Policy and will unilaterally monitor and administer this MAP Policy. KHSA has not solicited, and will not solicit, any input from dealers to formulate this Policy or to set the Minimum Advertised Price level for any brand or product.

 

PURPOSE

The purpose of this policy is to assure that dealers have sufficient resources to promote inter-brand competition between Covered Brands and competing brands of musical instruments, to provide promotional and informational activities to promote Covered Brand equity and to provide appropriate support to customers for the Covered Brands and Covered Products (defined below) in the USA.

 

SCOPE

This MAP Policy applies to advertising by dealers located in the United States for instruments sold as “New,” and “Demo” products as further defined in this Policy. This MAP Policy does not apply to any advertised price where the dealer clearly, conspicuously and proximately identifies the Product to be sold as “Second”, “B Stock” or “Used.” MAP also does not apply to Products that are discontinued by KHSA, as shown by the absence of a MAP Price on the then-current Confidential Price List, or as otherwise removed from the MAP Policy by written communication from KHSA to authorized dealers.

KHSA will apply this MAP Policy to individual products (“Covered Products”) within a Covered Brand by notice to dealers in a confidential price list or other written communication. KHSA may, in its sole discretion (i) exclude any individual products, product lines, models or serial numbers within a Covered Brand from this MAP Policy, (ii) cover all or less than all of a particular brand’s products within a Covered Brand, and (iii) not cover an instrument brand it distributes under this MAP Policy.

Nothing in this policy should be construed as an express or implied agreement, contract or a solicitation for an agreement about, or a requirement concerning, actual resale prices to customers, which are set by each dealer in its own discretion. KHSA will not seek, nor accept, assurances from any dealer that they will comply with this MAP Policy, in part or in whole, nor accept or acknowledge compliance or non-compliance with this MAP Policy as reported by any third party unless that third party is specifically retained by KHSA for the purpose of monitoring compliance with this MAP Policy.

 

LIMITATION

This MAP Policy is void and does not apply in any jurisdiction where such a policy is unlawful to enforce or is per se unlawful.

 

OVERVIEW

KHSA intends to monitor advertising in the marketplace by its dealers for compliance with this Policy. This policy applies only to “advertised” prices and does not apply to the actual retail price for which the products are sold or offered for sale to customers by the dealer immediately prior to bona fide sale.

This MAP Policy and the related minimum advertised price list is each proprietary and confidential. Dealers shall not communicate any portion of this policy to any third party either in content or any related pricing covered under this policy.

This MAP Policy includes, but is not limited to advertising on dealer’s authorized website, Approved Marketplace Site, and search engine results pages. Use of third party auction sites by its nature does not comply with this MAP Policy, and is not permitted.

MAP Policy pricing and Covered Products included under the MAP Policy will be published and available on confidential dealer price lists for the Covered Brand. These practices will vary from brand to brand. If a KHSA confidential dealer price list does not list a brand as a Covered Brand or a product within a Covered Brand as a Covered Product, this MAP Policy does not apply.

For KHSA Covered Products that are advertised in conjunction with other products, gift cards, etc… whether from KHSA or third-party vendors, the MAP Policy price for the Covered Product must be clearly identified together with the Covered Product to comply with this MAP Policy.

Under no circumstances will verbal conversations with any KHSA employee be considered, authorized or binding upon KHSA relative to the monitoring or enforcement of consequences under this policy.

This document contains the complete KHSA MAP policy in effect on the date of publication of this document as listed in the preamble. This document supersedes all previous policies and will remain in effect until terminated, cancelled, modified or revoked by KHSA at its’ sole discretion. KHSA may revise, replace or discontinue this MAP Policy at any time without prior notice to dealers..

 

KHSA DEFINITIONS OF MAP PRICES

“MAP” means the “Minimum Advertised Price” for the specific KHSA Covered Product, as set forth on KHSA’s then-current Confidential Dealer Price Lists, which may be amended by KHSA from time to time. KHSA reserves the right to temporarily lower or suspend the MAP Policy pricing on specific Covered Products at its’ sole discretion.

To comply with the MAP Policy, the price of a Covered Product in all of its advertisements must be equal to, or higher than, the published MAP Policy price. The MAP Policy Price as shown on the then-current Confidential Dealer Price List applies to the sale of “New”, and “Demo” products. KHSA Covered Products may not be included in “global discount” advertising if the advertised discount takes the price below the MAP Policy price.

All advertisements in all media, including without limitation on all websites, of KHSA Covered Products are deemed to be of “New” products unless there appears, in conjunction with the product image and the advertised price, a clear and conspicuous statement identifying the specific product as “Second“, “B Stock” or “Used“.

To satisfy the “clear and conspicuous” requirement, the relevant category of the product being advertised must appear, in the same size font as the product name, in conjunction with the product image and the advertised price every place either of these appears in any advertisement.

Usage by any dealer of any alternate or website-specific product designations (i.e. “Blem”, “Scratch and Dent”, “Re-box,” “Manufacturer Refurbished,” etc.), does not comply with this policy and does not alter or replace the standard definitions as set forth above.

KHSA Definition of “Advertisement”
This MAP Policy applies to all advertisements of products in any and all media, including, but not limited to, flyers, posters, coupons, mailers, inserts, newspapers, magazines, catalogs, mail order catalogs, e-mail newsletters, general (not individualized) e-mail solicitations, Internet or similar electronic media, television, radio, and public signage.

This MAP Policy is not applicable to any brick and mortar in-store advertising that is displayed only in the dealer’s store or to any advertising distributed to consumer(s) exclusively in the dealer’s store.

If a dealer chooses to advertise prices for any of the products in its promotional efforts, the pricing must be at or above the current MAP pricing listed in the current official price list to be in compliance. It is not a violation for a dealer to leave out pricing information in its advertising and promotions entirely.

If pricing is advertised (as defined above), any strike-through or other alteration of the Minimum Advertised Price is not in compliance with this policy.

For Internet sales of any product, any displayed price, including the price that appears in the website’s “add to cart” feature, prior to the actual purchase of the Product, is considered an advertised price and is subject to MAP.

This MAP Policy does not in any way limit the ability of any dealer to advertise that “we have the lowest prices” or that “we will meet or beat any competitor’s price”. However, this policy does not allow advertising that suggests “call for a price” or on-line chat that provides pricing prior to transaction.

The advertisement of reduced prices or services or products, whether presented individually or part of a bundle, in which the products come from KHSA, other manufacturers or any combination thereof, is not a violation of the MAP Policy, provided that the KHSA Products and/or the bundle are advertised at or above MAP.

 

KHSA DEFINITION OF COVERED PRODUCT CATEGORIES

“KHSA Covered Product” as defined for MAP purposes will fall into one of four categories: “New”; “Demo”; “Second” or “B Stock”; “Used”.

  1. New” – Defined as a Covered Product that has been purchased directly from KHSA by a dealer authorized to sell the specific product. KHSA MAP Policy prices apply to “New” KHSA Covered Products as shown on the then-current confidential dealer price lists.

    Product that has been purchased by Dealer as ”New” product remains “New” product for purposes of the MAP Policy if the Dealer has elected to open the original packaging, but has otherwise not sold the product, or utilized it in a manner that would qualify it as “Demo” or “Second” product, as described below.

  2. Demo” – Defined as products that are functionally and cosmetically equivalent to “New”, or have incurred minor cosmetic damage as a result of shipping, customer handling in-store, sales floor wear and tear, or have been returned by customers within the terms of the dealer’s New Product return policy, and contain all original packaging and paperwork. This MAP Policy prices apply to “Demo” Covered Products as shown on the then-current confidential dealer price lists.
  3. Second” or “B Stock”- Defined as Covered Products in an authorized dealer’s inventory that has been purchased directly from KHSA at a price below normal dealer net price due to functional, cosmetic or other clear and conspicuous defects that differentiate the product from “New” first quality merchandise, or represent discontinued, closed out, obsolete or out of date models that KHSA has determined to sell other than as New.
  4. Used”- Defined as Covered Products that that have been sold or rented to a consumer and have obvious wear and tear from consumer use. These may not be represented as “New”, “Demo”, “Second” or “B Stock” and no longer carry a manufacturer’s warranty. “Used” products must be clearly marked as “Used” and are not covered under this MAP Policy.

 

POLICY VIOLATIONS

If KHSA determines that a dealer has violated this MAP Policy, KHSA may cancel the dealer’s pending orders and return deposits, if any; terminate the dealer’s affiliation with KHSA or the Covered Brand affected by the violation; or take such other action as KHSA unilaterally determines is necessary and appropriate, including without limitation withholding any benefits offered by KHSA for compliance with this MAP Policy.

 


 

Minimum Advertised Price (MAP) Q & A

 

Q: Is KHSA requiring dealers to agree to advertise at or above MAP?

A: No. KHSA has determined on its own that it is in the business interests of the company to implement the MAP Policy. Dealers remain free to advertise, and to sell, products at whatever prices they believe are appropriate. KHSA is advising dealers that there are certain actions that it will take unilaterally, to protect the value of its’ brands if a dealer advertises in ways that do not comply with this MAP Policy.

 

Q: How will MAP apply to advertisements that feature more than one KHSA Covered Product subject to MAP?

A: Where two or more Covered Products are advertised for a single price, to comply with MAP the advertised price must be no lower than the sum of the MAP Policy prices for the individual products.

 

Q: What if the advertisement clearly shows a KHSA product, and a price (for example “starting @ $” or “as low as $”), but the specific SKU / model number is not identifiable on the product photo?

A: This represents non-compliance with this policy. If the model number is evident from the photograph of the product (due to the design or features described in the ad), then the MAP for that product applies to the advertisement.

 

Q: What if the advertisement features a KHSA Covered Product and other products not subject to KHSA’s MAP Policy?

A: The application of the MAP Policy will depend on how the non-covered product is advertised.
If the advertisement features a KHSA product subject to MAP, and another brand of product or a KHSA product that is not subject to MAP, the advertisement will comply with MAP so long as the non-covered product is either being offered free of charge, or the price associated with the KHSA Covered Product complies with MAP.

 

Q: What if there is a MAP for a product combination (drums and hardware), but only the drums are being advertised from the package?

A: KHSA has a MAP for all drum set combinations. Under the MAP Policy, any drum taken from a combination will be deemed to have a MAP equal to the MAP for the combination, unless there is a separate MAP for the drum being advertised.

 

Q: Is a dealer’s response to a school’s RFP considered to be an “advertisement” subject to MAP?

A: No. MAP does not apply to prices quoted in response to school RFPs, provided that the quoted prices are disclosed solely to, and accessible solely by, the requesting school or educational institution. Responses by dealers to school RFPs are appropriately considered requests for specific transaction prices.

 

Q: How does MAP apply to advertisements that do not show prices?

A: KHSA Covered Products may not be included in “global discount” advertising if the advertised discount applied to the Covered Product takes the price below the MAP price.

 

Q: What about a dealer’s use of “gift cards” that provide discounts on future purchases?

A: Gift cards provided to consumers when they purchase KHSA products from the dealer, and which provide for discounts on subsequent purchases from the dealer, do not affect the advertised price of the KHSA products in question, and do not operate to bring these prices below a stated MAP price.

 

Q: For e-commerce, I use an “add to cart” feature, which then shows the price. Can I continue to show pricing in this manner?

A: The price shown in the “add to cart” prior to the actual purchase of the product must comply with KHSA MAP Policy.

 

Q: In my catalog, and on my website, I have specific KHSA products with MAP prices, and a “strikethrough”. Have I complied with MAP?

A: No. The “strikethrough” provides pricing information other than the MAP Price and by its nature implies a MAP violation.

 

Q: I run a “buyers’ club,” which requires customers to join or register affirmatively, then login, after which they can see discounted, below-MAP prices on my website. Does this practice comply with MAP?

A: No. A “club” price or any other price that is visible to customers without making a “specific inquiry” as described in the Policy is considered an “advertisement” and is therefore subject to MAP.

 

Q: I have posted on my website two price columns – an “MSRP” price (or list price), and a “MAP” price. As the advertised prices are all at or above MAP, have I complied with KHSA MAP Policy?

A: No. As explained above, the MAP Policy is a unilateral KHSA policy provided to authorized dealers, and KHSA considers the terms of that Policy to be confidential. Any posting to consumers of a price using the term “MAP Price” violates the Policy.

 

Q: On my website, I have an “explanation of MAP” prices, so that consumers understand that this is a manufacturer requirement and that we may be able to do a little better if they contact us for a price. Can I keep this “explanation of MAP” if it appears consistently on each page of my website and is not linked to specific KHSA Covered Products?

A: No. The MAP Policy is a confidential policy provided by KHSA to its authorized dealers. Even if the “explanation of MAP” is not linked to specific KHSA Covered Products, if it appears on any page (or facing a page) that includes KHSA products – within a website, or a catalog or flyer – it is still covered by KHSA’s Policy. KHSA regards the discussion of MAP pricing as a violation of confidentiality.

 

Q: Why can’t a dealer discuss its own or another dealer’s MAP violation issues of another dealer with KHSA personnel?

A: It is important that KHSA’s enforcement of MAP be unilateral and consistent. KHSA has centralized MAP monitoring and enforcement at the corporate level. This makes it possible to provide appropriate written guidelines for our MAP policy, and to enforce MAP on an effective basis.