Protecting Your Price Without Breaking the Law: A Smarter Path for Manufacturers
Disclaimer: This blog is for informational purposes only and does not constitute legal advice. If you’re planning to implement pricing policies, restructure your distribution agreements, or do anything that might trigger antitrust laws, please talk to a qualified attorney, not a guy named Jason with a blog. Every manufacturer and distributor is different, and not all strategies mentioned here will be appropriate (or legal) in your situation. Be smart. Don’t wing it. This blog won’t hold up in court.
The veterinary medical equipment and device market is competitive, dynamic, and not for the faint of heart.
In any competitive market that becomes saturated with lookalike and copycat products, pricing becomes more than just a number. Pricing sends one of the strongest messages about your brand and the value that it delivers. While price and value are not one in the same, there is a correlation between the two. The moment that a product starts to be sold below its intended price, the perceived value of that product may quickly erode or decay. Likewise, when a product is discounted too aggressively or inconsistently, it sends a signal to the market that the product may not have the value that the MSRP commands.
When prices lose stability, distributors get nervous and customers begin to experience skepticism about your product or service while your competitors will see this instability as something to take advantage of. Eventually even the most loyal distribution partners will wonder if your product pricing is worth defending.
Maintaining a healthy pricing structure isn’t about greed or artificial inflation. It’s about protecting the investment made in R&D, training, support, education, and brand equity. A product that consistently sells at its intended price not only reinforces its quality but also gives distributors the confidence to advocate for it while giving veterinarians and techs a reason to trust it.
Now here’s the HUGE problem….
Many manufacturers are unknowingly breaking the law while trying to protect their product’s pricing.
In the U.S., pricing policies must be handled with extreme care due to federal antitrust laws, particularly the Sherman Antitrust Act and relevant case law. When manufacturers attempt to control how their products are priced downstream (especially by telling distributors what they must charge or by making pricing a contractual condition) they risk violating laws against Resale Price Maintenance (RPM).
Under Section 1 of the Sherman Act, it is illegal for two or more parties to enter into an agreement that “restrains” trade. That includes price-fixing agreements between a manufacturer and its distributors. If a manufacturer and a distributor agree either formally or informally that the reseller will not advertise or sell below a certain price, that can be construed as illegal vertical price-fixing.
However, not all pricing policies are illegal. The Colgate Doctrine, a legal principle established in United States v. Colgate & Co. (1919), allows a manufacturer to unilaterally set pricing policies and choose not to do business with distributors or resellers who don’t comply. This is lawful as long as a certain set of criteria is met:
The pricing policy is not part of any agreement or contract
There is no negotiation or discussion of the policy terms
The policy is applied consistently and without favoritism
In short, many manufacturers fall into legal gray zones because they blur the line between unilateral policy and negotiated pricing behavior. Once it becomes an agreement, the protection of the Colgate Doctrine no longer applies, and the risk of antitrust liability becomes real.
In other words, it’s the act of a manufacturer and distributor mutually agreeing on price or a price policy that creates legal exposure.
This week’s blog has a clear goal: To illuminate where the legal boundaries truly lie, explain why so many manufacturers inadvertently cross them, and to provide a roadmap for designing a pricing strategy that effectively protects your brand without risking a lawsuit.
Scrutinize Your Distributor Contracts and Agreements
If you are a manufacturer, paying close attention to distributor contract language is more than just a legal step in forming a partnership. In fact, it can be one of your only points of leverage when it comes to your pricing. Sadly, many manufacturers lose control of their pricing strategy because they inadvertently agree to contract terms that eliminate their ability to enforce pricing policies through discretionary leverage.
Boilerplate distributor agreements can have the tendency to be loaded with one sided obligations that favor them such as guaranteed fill rates, fixed delivery schedules, inventory availability minimums, or fill rate clauses that commit the manufacturer to fulfill orders no matter what. While these types of clauses also help to ensure veterinary hospitals receive supplies, this type of contract language may come at a steep cost in that it can tilt operational leverage and control away from you as the manufacturer.
If you are a manufacturer trying to enforce pricing integrity, you may discover that your distributor agreement legally obligates you to ship product regardless of whether that distributor is complying with your pricing expectations. Even if you’ve created a clean, one-way policy, communicated it properly, and refused to negotiate, you may still be forced to supply product to a distributor that undercuts your pricing, damages your market reputation, and trains buyers to expect discounts.
Why? Because you tied your hands when you signed the agreement with your distribution partner.
This is exactly why contract language must be reviewed with more than just logistics in mind. As a manufacturer, consider negotiating the terms of your distributor agreements to ensure that you have the right to preserve discretionary control, including the right to:
Suspend or hold shipments without triggering a breach of contract
Consider a Terminate for Convenience Clause allowing you to exit the partnership with appropriate notice, even in the absence of cause.
Decline or cancel POs even if the distributor is otherwise in compliance with other commercial terms
Adjust or modify distributor benefits such as co-op marketing funding or rebates/margin provided on the back-end
This does not mean that you should or need to become draconian or take an approach that doesn’t involve trust. Remember that your goal isn’t to punish distributors but instead to protect your value proposition, and you can’t do that if your contract forces you to supply product to bad actors.
Ensure Your Pricing Policy Is Unilateral
So then how do you legally protect your product value as a manufacturer?
Here’s how to do it right: After you’ve reviewed your distributor contracts, establish a Unilateral Pricing Policy (UPP) or Minimum Advertised Price (MAP) policy that clearly outlines your company’s expectations for pricing and never ever present it as a term of an agreement or an agreement of any other definition. The defining characteristic of a lawful policy is that it is not an agreement; it’s a policy that is a “one way street”. That means your distributors or resellers do not sign it. Ever.
The policy must be issued independently as a corporate statement of policy, such as the below example:
“As a matter of company policy, we choose not to continue doing business with distributors or resellers who advertise The Mighty Vet Monitor below a published MAP of $5,500.”
The power of this approach lies in its simplicity and its legality. You’re not asking for anyone’s permission or threatening enforcement. You’re stating your position and backing it up with action when necessary. Period.
If a reseller violates the MAP policy, you don’t try to negotiate compliance or give in if they say “but the other distributor is doing it”! You simply follow through with the terms set in the policy. The decision must be executed uniformly and without favoritism, which is why documentation and consistency matter. Any deviation can be used as evidence of selective enforcement, which undermines the entire legal structure of the policy and opens you to legal challenge.
A properly executed policy should be treated as something that has company wide buy-in that applies across relevant teams: sales, marketing, operations, and leadership. Everyone must understand that this is not a suggestion, nor a conversation starter. It’s a company stance. Once issued, the only communication with resellers should be informational only and never a negotiation.
Reward Compliance Instead of Policing Behavior
In my experience, there’s a far more effective approach than trying to enforce pricing through threats or punitive measures: incentivize the behavior you want to see.
Instead of spending energy trying to prevent pricing violations, shift your focus to rewarding those who align with your strategy and are able to hold price integrity when selling your products. When structured correctly, incentive-based compliance does far more than protecting your brand through policing and negative reinforcement.
How can a manufacturer do this? Start by designing performance based incentives tied to policy behavior, not contractual pricing obligations. Examples might include:
Offering an annual discretionary rebate to distributors based on their observed adherence to a published unilateral pricing policy as well as achieving other commercial goals.
Providing co-op marketing funds or demo units to distributors whose conduct aligns with a published unilateral pricing policy .
The key legal safeguard here is this: incentives for distributors must not be conditioned on a mutual agreement around pricing. The key words being “mutual agreement”. In other words, manufacturer’s can’t require the distributor to sign anything acknowledging price policy adherence or promise the rebate if they follow a rule. Simply observe their public behavior, and if it aligns with your published pricing policy, you choose to offer the incentive. The moment it becomes a two-way agreement, it risks violating antitrust law.
Beyond legal safety, this strategy has a powerful psychological effect. It shifts the distributor mindset from compliance avoidance to value alignment. Instead of thinking, “How much can I get away with discounting?” your partners begin thinking, “What do I gain by protecting this brand’s value?” Over time, the right incentive structure helps filter your reseller base as you watch those who care about long-term margin and strategic fit rise to the top while those who chase short-term volume at any cost will self select out.
Incentives also give you more flexibility than enforcement. If market conditions change, you can adjust rebate thresholds, enhance rewards for top performers, or tie benefits to new behaviors like bundling, upselling, or clinician education. This adaptability makes incentive-based compliance a dynamic and fun brand-building tool.
Smart manufacturers use incentives to scale pricing discipline without ever touching enforcement. They reward loyalty, protect positioning, and create internal alignment between sales and legal teams. Most importantly, they keep their partners engaged and motivated because while nobody likes being policed, everybody likes being rewarded.
Use Segmentation For Success
While unilateral pricing policies and incentive-based compliance are essential tools, many manufacturers stop there and overlook one of the most powerful, proactive strategies available: controlling access to your product based on channel segmentation.
Here’s what that means in practice. Instead of trying to enforce pricing behavior across every distributor equally, structure your channel so that access to your full catalog, promotions, and benefits is limited to those who consistently align with your brand’s performance expectations including pricing integrity.
For example, you might classify your resellers into tiers:
Strategic Partners: Trusted distributors who consistently demonstrate alignment with your sales, marketing, and pricing expectations. They get full access to your product catalog, co-op marketing support, early access to new products, and higher backend incentives.
Authorized Resellers: Distributors who meet baseline criteria, but don’t receive full benefits. They may have limited SKUs or reduced marketing support.
Unauthorized Sellers: Anyone not officially approved or authorized. No access to programs. No support. No incentives. Nada.
This model lets you stop reacting to violations and instead reward alignment by design. There’s no need to chase down every reseller or argue about pricing violations. If a partner doesn’t consistently meet your standards, you simply limit or remove access to your value-added programs.
The key to a segmentation approach is by using multi-factor eligibility criteria that goes beyond price alone. That might include:
Participation in product training or clinical education
Commitment to brand-aligned marketing efforts
Quality of customer support service coverage
Compliance with territory or promotional guidelines
Observed adherence to your published pricing policy (with…you guessed it… no agreement required)
Legally, this approach is fully compliant as long as pricing behavior is observed, not contractually agreed to, and you apply eligibility rules uniformly across your distribution network. Instead of fixing prices, you are simply making strategic choices about who qualifies to represent your brand and what privileges they earn by doing so.
Over time, this model does more than protect price in that it also provides a unique way to filter your channel. You’ll find those partners who value margin discipline, brand equity, and long-term relationships which is exactly the type of distribution strategy that scales: one that rewards alignment, builds loyalty, and keeps you out of court.
Need a Second Set of Eyes? Let Us Help
At VistaVet Global Partners, we help manufacturers navigate the complex intersection of brand protection, pricing integrity, and legal compliance. If you’re unsure whether your current distributor contracts or pricing policies expose you to unnecessary risk or if you’re ready to design a smarter structure from the ground up, get in touch with us.
We offer confidential policy reviews, contract language audits, and pricing strategy consulting to ensure your product’s value stays protected.
