# MEMORANDUM — PRIVILEGED & CONFIDENTIAL / ATTORNEY WORK PRODUCT **To:** Chief Executive Officer; General Counsel; VP Sales; VP Marketing **From:** Competition Counsel **Re:** Norvale Audio Minimum Advertised Price ("MAP") Program — legality of design, required changes, and implementation **Recommendation in one line:** **Adopt the CEO's version, modified as set out below; reject the Sales Department's version outright.** The CEO's structure is defensible under the Aven framework; four features of the Sales proposal would convert lawful unilateral conduct into agreement evidence and should never be implemented. --- ## 1. Executive summary 1. **The program as designed by the CEO regulates advertising, not resale price** — but only if the policy text and, more importantly, day-to-day enforcement never reach the confidential checkout price. Drafting and enforcement discipline are doing the work here, not the label (Rule 9). 2. **Unilateral announcement plus independent supply decisions is lawful** (Rule 1). What creates a resale-price *agreement* is assent-seeking: promises, negotiation, assurances about rivals, collective enforcement, coercion (Rule 2). The Sales proposal contains all four. 3. **Four features must be deleted:** - the signature line "We agree to comply with Norvale's pricing requirements" (Rule 3); - regional-manager **negotiation** of exceptions (Rule 7); - the statement that Norvale will "**make everyone hold the line**" (Rules 2, 6, 8); - **soliciting retailer reports** on competitors' discounting (Rule 6). The large dealer's demand for a guarantee of enforcement against every rival is an **invitation to agree** and must be refused in writing before the policy is announced (Rules 2, 8). 4. **Rule-of-reason risk is comparatively low.** 18 percent share in a market with rivals at 16/14/11/9, two entries in three years, 120 retailers none above 7 percent, and a genuine service/free-riding rationale (demonstrations, installer training, 60-day returns). The weak spot is evidentiary: the internal analysis does not quantify effects, so Norvale should build a service-benefit record before and after launch, and select the **least restrictive** design that works — which is an advertising-only restraint, not a resale-price floor. 5. **Residual risk is not zero.** A MAP policy invites retailer lobbying, and the greatest exposure is a sales employee saying the wrong thing in a phone call. The controls in Part 8 are designed to make that a documented deviation rather than company practice. --- ## 2. Does the proposed design reach advertising or resale price? ### 2.1 As drafted, advertising only The design has the three characteristics that keep a MAP program on the advertising side of Rule 5: - **It fixes a floor on public price *representations* only** (MAP = list minus 8 percent), not on the price at which title passes. - **It expressly preserves retailer freedom over the final confidential transaction price.** Each retailer may sell at any price it chooses, including below MAP, without consequence. - **It contains no clawback, no margin reporting, no transaction-price audit right.** ### 2.2 Where policies like this drift into resale price — and the safeguards The policy will be judged by how it is written *and* administered. The following are the realistic drift points; each has a required safeguard: | Drift risk | Safeguard adopted | |---|---| | Policy uses global words like "pricing requirements," "price policy," "no discounting" | Use only "advertised price." The word "discount" appears nowhere as a prohibited act. Policy title: *Minimum Advertised Price Policy*. | | Enforcement triggered by a **checkout** or invoice price found by test purchase | Monitoring and enforcement rely **only on publicly accessible price representations**. Norvale will not conduct test purchases, will not use loyalty/login-gated data, and will not open a violation file based on a reported final sale price. | | Ban on in-cart price display, on coupon codes generally, or on "call for price" | MAP does **not** apply to: the price shown after a consumer initiates a purchase path (cart/checkout); individualized quotes by phone, chat, email, or in person; non-public price-match honored on request; negotiated installer/bid pricing. | | Publicly broadcast automatic discounts that are advertising in substance | MAP **does** apply to publicly disseminated coupon codes, banners, or site-wide offers that state or arithmetically disclose a below-MAP price to the general public. This is a line about *publication*, not about the transaction. | | Sales staff telling a dealer "your street price is too low" | Prohibited script (Part 8.1). Only the advertised figure may be discussed, and only by the Compliance Administrator. | **Bottom line:** with these definitions, the program is properly characterized as an advertising restraint. Norvale should nonetheless assume a plaintiff will argue that an 8-percent MAP plus escalating supply penalties functions as a price floor; the defence is the documented preservation of, and actual observed use of, sub-MAP checkout pricing. Norvale should therefore **not** be disturbed if data show retailers transacting below MAP — that is exculpatory evidence, and no one may be penalised for it. --- ## 3. Unilateral policy versus agreement Rule 1 permits Norvale to (a) announce conditions and (b) decide independently whether to keep supplying a non-conforming retailer. Assent is not required — and, critically, **must not be sought**. The distinction is practical: | Unilateral (protected) | Concerted (creates agreement evidence) | |---|---| | Norvale announces; retailers do as they wish | Norvale asks retailers to promise, sign up, or confirm they will comply | | Norvale decides alone whether to continue supply, on preannounced criteria | Norvale negotiates whether and how to enforce, or trades supply for commitments | | Receipt-only acknowledgment | "We agree," "we accept," "we commit," "we request approval" | | Silence about other retailers | "Everyone else is holding the line"; "we will take care of Retailer X" | | Objective exceptions applied ministerially | Exceptions bargained retailer-by-retailer | | Complaints received, filed, unanswered on substance | Complaints solicited, acknowledged with enforcement promises, used as a policing network | | Termination memo cites the retailer's own conduct and the published criteria | Termination follows a rival's request or is threatened to induce a price move | Two operational corollaries: - **No assent, no condition precedent.** Supply must not be conditioned on returning a signature. If a retailer refuses to sign the receipt, Norvale ships anyway and records that the policy was delivered by email and courier. - **Announcement, then patience.** The policy is effective **prospectively** (recommended 45 days after issuance), applies uniformly to all 120 retailers and to Norvale's own direct/e-commerce advertising, and its enforcement is not opened for discussion. --- ## 4. The four specific risks in the Sales proposal ### 4.1 Signed language — delete "**We agree to comply with Norvale's pricing requirements**" is fatal on three counts under Rules 2 and 3: it is a *promise*, it accepts an *obligation*, and it speaks to "pricing" rather than advertising. A signature of that text, multiplied by 120 retailers, is the plaintiff's exhibit list. **Replacement (receipt only):** see Annex B. It states that the retailer *received* the policy on a date, that no promise is requested or given, and that the retailer remains free to set its own advertised and resale prices and to accept the consequences Norvale has announced. Do not add "we understand and will comply." Do not add a countersignature by Norvale. Return of the receipt is requested, not required. ### 4.2 Negotiated exceptions — delete the negotiation, keep the exceptions Rule 7 makes negotiated, retailer-specific exceptions a route to concerted action, because the exception becomes consideration for adherence. Regional managers must have **zero** authority over exceptions, violations, penalties, or reinstatement. Those decisions move to a **Compliance Administrator** in Legal/Finance, who applies published criteria and issues yes/no determinations with no conditions attached, no quid pro quo, and no discussion of the retailer's future pricing. Two design notes: - Replace "manufacturer-authorized promotions" (which invites *approval requests*, and thus bargaining) with **Norvale-announced promotional windows**: Norvale publishes, in advance and to all retailers simultaneously, a calendar of periods and SKUs during which a lower MAP or no MAP applies. Participation is optional and requires no application. - For genuinely retailer-specific categories (discontinued SKUs, open-box/refurbished/damaged-packaging units, clearance of the final units of a SKU, employee/charitable sales), make eligibility **self-executing on objective facts**, with the retailer simply notifying Norvale. No permission is needed; Norvale may verify after the fact. ### 4.3 The "we will make everyone hold the line" assurance and the large dealer's ultimatum — refuse, in writing Telling compliant dealers that Norvale will make everyone hold the line is the single most dangerous proposal on the table. It is (i) an assurance that competitors will comply (Rule 2), (ii) a promise of enforcement for a complainant's benefit (Rule 6), and (iii) evidence of a **dealer cartel** administered by Norvale, which also worsens the rule-of-reason balance (Rule 4). The large dealer's statement that it will support Norvale "only if Norvale guarantees enforcement against every rival" is an express invitation to agree, coupled with implicit leverage. Required response: - **Written, dated refusal**, on the record: Norvale will not give assurances about any other retailer's advertising or pricing, will not guarantee enforcement outcomes, will not discuss any other retailer's conduct, and asks the dealer not to raise the subject again. Signed by the GC or CEO, not by Sales. - **No retaliation and no reward.** The dealer's support is irrelevant; it continues to be supplied on ordinary terms. - **Timing hygiene.** So the policy does not look like the price of that dealer's support, (i) preserve the pre-existing internal documents showing the free-riding/service rationale was developed independently and earlier, (ii) issue the refusal letter before announcement, and (iii) have the CEO sign a short decision memo stating the policy was adopted on the company's own service-preservation grounds and that no retailer request, complaint, or condition was a reason for it. - If any retailer says "I'll comply if you make the others comply," the answer is: *Norvale sets no condition on you, seeks no commitment from you, and will say nothing about anyone else.* ### 4.4 Asking retailers to report competitors — delete Rule 6 allows Norvale to *receive* complaints but forbids soliciting them as a policing system. Asking 120 retailers to report each other builds exactly that system, and pairs it with the enforcement-promise problem. Therefore: - **No solicitation** — no reporting portal marketed to dealers, no "report a violation" form, no request in the policy, newsletters, sales calls, or QBRs, no incentives or credits for reports. - Monitoring is **independent**: a third-party price-crawling service plus Norvale's own review of public sites, marketplaces, price-comparison feeds, and print/social advertising. Norvale can see public ads without dealer help, which is the whole point. - Unsolicited complaints are handled per the script in Annex C: logged, thanked without commitment, closed to the complainant. **Never** disclose another retailer's pricing, plans, or the existence/status/outcome of any enforcement file; **never** say "we're handling it." - Where an unsolicited complaint identifies a public ad, the Compliance Administrator may verify it through independent monitoring and act on the *independent verification*, recording that the complaint was not the basis of the decision and that no response was given to the complainant. This is the single point most likely to be attacked; keep the file clean. --- ## 5. Rule-of-reason assessment (Rule 4) **Market power — favourable.** 18 percent, with rivals at 16, 14, 11 and 9 percent (top five ≈ 68 percent, no dominant firm). Norvale cannot raise market prices; a retailer or consumer who dislikes the policy has four substantial alternatives plus the fringe. **Barriers to entry — favourable.** Two entrants in three years indicates entry is feasible and timely, which constrains any attempted output restriction and undercuts an anticompetitive-effects theory. **Retailer structure and cartel evidence — favourable *if* Part 4 is followed.** No retailer exceeds 7 percent of national sales across 120 outlets, so no dealer has the clout to extract a price floor, and there is no plausible dealer-cartel-driven adoption — **unless** Norvale itself creates one by guaranteeing enforcement to a large dealer or running a complaint network. The risk here is self-inflicted, not structural. Equally, Norvale must not discuss MAP policies, levels, or enforcement with competing manufacturers (including in trade-association settings); parallel MAP adoption plus contact would raise a manufacturer-cartel inference and materially change the analysis. **Market coverage — moderate and to be monitored.** The restraint covers only Norvale-brand resale advertising (18 percent of sales). Counsel should nonetheless track publicly known industry practice: if all significant manufacturers were operating comparable MAP programs, cumulative-coverage arguments strengthen. Track it; do not enquire of competitors. **Price effects — the evidentiary gap.** Internal analysis predicts service preservation but does not quantify a price increase. Neutral-to-helpful on harm (no projected consumer price increase, no stated intent to raise retail prices), but weak on benefit. Two consequences: - **Document discipline.** No document may say the purpose is to protect dealer margins, satisfy dealer complaints, stop "cheating," or raise retail prices. Rationales must be *accurate* (Rule 9): funding demonstrations, installer training and the 60-day return program, and preventing free riding on them. - **Build the record.** Before launch, capture baselines: demonstration-room counts and cost per demo, trained installers, return rates and cost of the 60-day program, conversion rate of demonstrated versus non-demonstrated sales, evidence of showroom-then-buy-online behaviour (e.g., serial-number tracing, customer surveys, dealers exiting demonstration investment). After launch, measure the same series plus advertised and observed transaction prices. Schedule a **12-month review** with authority to modify or withdraw. **Service promotion and free riding — the core justification, and it is credible.** Demonstrations, installer training and a 60-day return program for premium speakers are classic pre-sale services that are (i) costly, (ii) non-appropriable, and (iii) valuable to consumers who then purchase elsewhere. Norvale sells an experience good where audition drives purchase, so the theory fits the product. **Product launch needs.** If Norvale wants launch-period support (demo units, training, floor space) for new models, note this in the record; a time-limited launch MAP is easier to justify than a perpetual one, and supports the promotional-window mechanism in Part 6. **Less restrictive alternatives — must be addressed, and partly adopted.** Expect the argument that Norvale could instead (a) pay for services directly (co-op advertising, demo-unit subsidies, per-demonstration or per-trained-installer payments), (b) impose authorized-dealer service standards (trained staff, functioning demo room, audition space, honouring the return program), or (c) restrict distribution selectively. Norvale should (i) **retain and expand** the direct service-funding and standards tools, so the MAP is a supplement rather than the only lever, (ii) record why those tools alone are insufficient (they compensate the service provider but do not stop the free rider from converting the audition into a below-cost online sale), and (iii) point out that Norvale has **chosen the least restrictive of the price-related options**: an advertising-only floor at just 8 percent below list, with the transaction price left entirely free — not a minimum resale price. **Net assessment.** On these facts a rule-of-reason challenge to the CEO's design is unlikely to succeed. Nearly all realistic exposure comes from *characterisation* (agreement rather than unilateral conduct; enforcement reaching transaction prices) rather than from market structure. --- ## 6. Objective exception design Requirements: published in the policy, uniform, fact-based, self-executing or ministerial, administered by the Compliance Administrator, no conditions, no bargaining, logged. - **Discontinued / end-of-life SKUs:** MAP terminates automatically on the published discontinuation date; Norvale publishes the list to all retailers simultaneously. - **Open-box, customer-returned, refurbished, damaged-packaging, display units:** exempt automatically when advertised with that condition disclosed. - **Norvale-announced promotional windows:** temporary MAP reduction or suspension, published in advance, identical for all retailers, no application, no approval. - **Final-units clearance:** exempt when the retailer's on-hand quantity of a SKU is at or below a published threshold and the SKU has not been reordered for 90 days; retailer notifies, Norvale may verify. - **Bundles:** a bundle including a Norvale product may be advertised at a bundle total without allocation, provided no Norvale SKU is advertised at a separately stated below-MAP price. - **Legal compliance / clearance obligations:** exempt where advertising a lower price is legally required. - **Withdrawn categories:** no "special circumstances," "case-by-case," "at Norvale's discretion," or "with Norvale's approval" exception. Discretion is the vehicle for negotiation. **Exception log:** every determination recorded with date, requester, criterion applied, outcome. Quarterly audit for consistency — inconsistent grants are evidence of bargaining. --- ## 7. Enforcement design The escalating schedule (30-day loss of promotional funds → 60-day supply suspension → termination for a third violation within 12 months) is acceptable *as unilateral announced consequences*, subject to: - **Preannouncement and uniformity.** Published before effectiveness; applied identically to every retailer, including large dealers and Norvale's own direct channel (whose non-compliant advertising is corrected and logged the same way). - **Rolling window defined.** "Within 12 months of the first violation notice"; violations lapse after 12 months. Multiple non-compliant ads by one retailer in a single crawl cycle count as one violation. - **Cure period.** A first notice may allow 3 business days to correct before the promotional-funds consequence attaches — a cure period is administrative grace, not negotiation. - **No bargaining, ever.** Consequences are not reducible, tradable, or waivable in exchange for commitments, assurances, adherence promises, or complaints about others. The Compliance Administrator has no authority to accept a promise in lieu of a consequence. Reinstatement after suspension is automatic on expiry of the period; reinstatement after termination is by objective criteria only (e.g., no application for 12 months, satisfaction of ordinary authorized-dealer standards) and never conditioned on pricing undertakings. - **Notices name only the retailer's own public advertisement** — URL/screenshot, date, advertised figure, MAP figure, step applied. No reference to any other retailer, to complaints, to the industry, or to what Norvale hopes the retailer will now do. - **Absolutely prohibited (Rule 8):** any statement or implication that Retailer A will be punished, or spared, depending on what Retailer B does or advertises; any threat used to induce a price increase; any "if you fix your ad, we'll deal with the others." - **Sales is walled off** from violation files, penalty decisions, and the monitoring dashboard's per-retailer enforcement status. --- ## 8. Internal training, complaints, monitoring, documentation ### 8.1 Training (mandatory before effectiveness; annual thereafter; certification recorded) **Approved statements:** - "Norvale has adopted a minimum advertised price policy. It is Norvale's own decision, and it applies to advertising only." - "You are free to sell at any price you choose. Norvale does not ask you to agree to anything and will not accept any commitment about your prices." - "I can't discuss enforcement or any other retailer. Compliance questions go to [Compliance Administrator]." **Prohibited words and acts (zero tolerance, disciplinable):** agree / promise / commit / assure / guarantee / approve / "hold the line" / "level playing field" / "everyone will comply" / "we'll take care of them"; asking about or discussing a retailer's checkout or transaction price; asking a retailer to report another; negotiating exceptions, penalties, or reinstatement; predicting or discussing another retailer's future pricing; discussing MAP with any competitor of Norvale; accepting or acknowledging any conditional offer of "support." **Escalation duty:** any retailer request for assurance, guarantee, coordination, or reciprocity must be reported to Legal within 24 hours and answered only by Legal. ### 8.2 Complaint handling (Annex C script) Single intake channel to the Compliance Administrator. Response is limited to: "Thank you. Norvale monitors public advertising independently and makes its own decisions. I can't discuss other retailers or any enforcement matter." Then: log it; do not follow up; do not report outcomes; do not thank the complainant later; never disclose another retailer's pricing or plans. Sales must not receive or forward complaints as a substantive matter — only route them, without comment. ### 8.3 Monitoring Independent third-party crawler plus Norvale review of publicly accessible advertising: retailer sites, marketplaces, comparison engines, feeds, email blasts to the public, print, social. Public sources only; **no** test purchases, mystery shopping into checkout, login-gated capture, or requests to consumers to report the price they paid. Dashboard access restricted to the Compliance Administrator and Legal. ### 8.4 Documentation - **Adoption file:** CEO decision memo (independent rationale, no retailer request as a reason), the pre-existing service/free-riding analysis, the refusal letter to the large dealer, the baseline service metrics, and a note on considered alternatives and why the advertising-only design was chosen as least restrictive. - **Per-action file:** unilateral decision memo template (Annex D) — evidence of the public ad, criterion, step, decision-maker, express statements that the decision was made independently, was not taken at any retailer's request, and involved no discussion of any retailer's future prices. - **Hygiene:** no MAP discussion on informal channels; email review; annual counsel audit of notices, exception log, complaint log, and terminations; 12-month effects review with authority to modify or sunset. Retain records for the applicable limitation period. --- ## 9. Adopt, modify, or abandon? **Modify and adopt.** Abandonment is unnecessary: the market structure is favourable, the service rationale is genuine, and the advertising-only design is a lawful, comparatively low-risk instrument. Adopting the Sales version would be worse than abandonment — it would convert a defensible unilateral program into documentary evidence of a resale-price agreement, with dealer-cartel overtones supplied by Norvale's own promises. **Adopt:** MAP at list minus 8 percent (advertising only); prospective written announcement; receipt-only acknowledgment; escalating preannounced consequences; objective exceptions; independent public-ad monitoring; unilateral enforcement by a Compliance Administrator; 12-month review. **Delete:** the "we agree to comply" signature; negotiated exceptions and all regional-manager enforcement authority; the "make everyone hold the line" assurance; solicited retailer reporting; any acceptance of the large dealer's guarantee condition. **Add:** definitional carve-out preserving checkout/individualised pricing; Norvale-announced promotional windows in place of approval-based promotions; training with scripts and prohibited-language list; complaint script; unilateral decision-memo template; baseline and post-launch service metrics; refusal letter; internal audit and sunset review. --- ## Annex A — Policy text (issue on letterhead, dated, to all 120 retailers) **NORVALE AUDIO MINIMUM ADVERTISED PRICE POLICY** *Effective [date, 45 days after issuance]. Applies to advertising on and after that date.* 1. **Norvale's unilateral policy.** This is Norvale's own policy, unilaterally adopted. Norvale does not request, and will not accept, any agreement, promise, commitment, or assurance from any retailer regarding advertised or resale prices. No retailer's assent is sought or required, and no retailer's response to this policy will be treated as an agreement. 2. **Your pricing freedom.** **Each retailer remains entirely free to determine the price at which it sells any Norvale product, including a price below the Minimum Advertised Price.** This policy governs public advertising only. Norvale will not monitor, request, question, or take any action based on a retailer's actual sale, checkout, invoice, or quoted price. 3. **Minimum Advertised Price ("MAP").** For each product, MAP is 92 percent of the then-current published list price. Norvale publishes MAP figures and will give at least 30 days' notice of changes. 4. **Advertising covered.** "Advertising" means any price representation publicly disseminated to consumers generally, including retailer websites and product-listing pages, online marketplaces, price-comparison feeds and search listings, print, broadcast, mail, email or social distributions, in-store signage, and publicly published coupon codes or site-wide offers that state or arithmetically disclose a price below MAP. Advertised prices at or above MAP are unrestricted; retailers may advertise any price at or above MAP, including "call for price," "add to cart for price," or no price at all. 5. **Not covered.** MAP does **not** apply to: the price displayed after a consumer has initiated a purchase path (cart, checkout, or account-based pricing); individualised quotes by telephone, chat, email, or in person; non-publicly honoured price matching; project, installer, or bid pricing; or any actual transaction price. 6. **Exceptions (automatic and objective).** MAP does not apply to: (a) SKUs on or after their published discontinuation date; (b) open-box, customer-returned, refurbished, display, or damaged-packaging units advertised with that condition disclosed; (c) periods and SKUs within a Norvale-announced promotional window, published in advance to all retailers on identical terms; (d) final-units clearance, where the retailer's on-hand quantity is at or below the published threshold and the SKU has not been reordered for 90 days (notice to Norvale required; no approval required); (e) advertised bundle totals that do not separately state a below-MAP price for a Norvale SKU; (f) advertising required by law. Exceptions are determined by Norvale's Compliance Administrator on these criteria alone. Norvale will not negotiate exceptions and will not condition an exception on any commitment. 7. **Consequences Norvale has decided to apply.** Norvale will independently decide whether to continue doing business with a retailer whose advertising does not conform. Norvale currently intends to apply: (i) **first instance** — 30-day suspension of promotional funds (a 3-business-day cure opportunity may be given); (ii) **second instance within 12 months of the first notice** — 60-day suspension of supply, after which supply resumes automatically; (iii) **third instance within 12 months of the first notice** — termination of the account. Instances lapse 12 months after notice. Multiple non-conforming advertisements identified in a single monitoring cycle count as one instance. These consequences are not negotiable, reducible, or waivable in exchange for any undertaking. 8. **Monitoring.** Norvale monitors publicly available advertising, including through independent third-party services. Norvale does not ask retailers to report other retailers' advertising or prices, does not solicit complaints, will not disclose any retailer's pricing or plans to any other retailer, will not discuss enforcement matters with any retailer other than the one concerned, and will give no retailer any assurance about any other retailer's conduct or about enforcement outcomes. 9. **Purpose.** Norvale adopts this policy to support in-store demonstrations, installer training, and the 60-day return program that Norvale funds, and to limit free riding on those services. 10. **Questions.** Direct all questions to the Compliance Administrator, [name, address, email]. Norvale sales personnel are not authorised to interpret, vary, enforce, or discuss this policy. 11. **Amendment/withdrawal.** Norvale may modify or withdraw this policy at any time, prospectively, in writing, and will review it at 12 months. ## Annex B — Acknowledgment (receipt only; return requested, not required) > **RECEIPT OF NOTICE.** [Retailer] confirms that it received Norvale's Minimum Advertised Price Policy dated [date] on [date]. This receipt confirms delivery only. It is not an agreement, promise, or commitment of any kind. [Retailer] has not been asked to agree to the policy and gives no assurance regarding its advertised or resale prices. [Retailer] understands that it is free to determine its own advertised prices and its own resale prices, and that Norvale will independently decide whether to continue supply. > Signed (receipt only): ______________ Date: __________ *No countersignature. No "understood and agreed." Supply is not conditioned on return of this receipt.* ## Annex C — Complaint script (Compliance Administrator only) > "Thank you for the information. Norvale monitors public advertising independently and makes its own decisions about its policy. I'm not able to discuss any other retailer or any enforcement matter, and Norvale can't give assurances about other retailers' pricing. Is there anything else about your own account I can help with?" Then: log (date, complainant, content); no substantive reply; no follow-up; no outcome report. If verification through independent monitoring identifies a non-conforming public ad, record that the decision rests on the independent verification and that no response or assurance was given to the complainant. ## Annex D — Unilateral decision memo (one per enforcement step) Retailer; date; **public** advertising evidence (URL, screenshot, publication, capture date); advertised price and MAP; monitoring source; exception analysis; step applied under the published schedule; decision-maker; and the certifications: *this decision was made by Norvale alone; it was not requested by, discussed with, or made for the benefit of any other retailer; no complaint was a basis for it; no retailer's future prices were discussed; the retailer's actual transaction prices were neither considered nor obtained; no commitment was sought or accepted.* --- ## 10. Implementation sequence 1. **Week 0:** GC/CEO sign the refusal letter to the large dealer; CEO signs the adoption memo; preserve pre-existing free-riding/service analysis. 2. **Week 0–2:** capture baseline service and price metrics; appoint Compliance Administrator; procure independent monitoring; wall off Sales. 3. **Week 2:** mandatory training with Annexes A–D, scripts, prohibited-language list, escalation duty, certifications recorded; disciplinary consequences stated. 4. **Week 3:** issue policy, MAP schedule, and receipt to all 120 retailers simultaneously by email and courier; align Norvale's own direct-channel advertising. 5. **Weeks 3–9:** notice period. No enforcement. Log all retailer requests for assurance or negotiation and route to Legal. 6. **Week 9 (effective date):** monitoring begins; enforcement only by the Compliance Administrator on Annex D memos. 7. **Quarterly:** counsel audit of notices, exception log, complaint log, terminations, and email hygiene; consistency check. 8. **Month 12:** effects review (service metrics, advertised and observed transaction prices, free-riding indicators, industry coverage) with authority to modify, narrow, or withdraw. --- ## 11. Residual risk This program can be made defensible; it cannot be made risk-free. Realistic exposure remains from: (i) an out-of-script conversation by a regional manager; (ii) a terminated retailer alleging that a rival's complaint drove the decision; (iii) an argument that an 8-percent advertising floor with supply penalties functions as a resale-price floor; and (iv) the current absence of quantified effects, which leaves the procompetitive record thinner than ideal. The controls above are designed so that any such incident appears as an individual deviation from a documented unilateral policy rather than as the policy itself — and so that Norvale can demonstrate, from its own files, that it announced conditions, sought no promises, gave no assurances, solicited no reports, negotiated nothing, and decided alone.