Grado has ALWAYS had a strict MAP - if your shop was selling under SRP they either weren't authorized or were otherwise being very naughty. Authorized Grado dealers always have stuck to their tiered pricing (HeadRoom, ListenUp, J&R, etc). Sennheiser is the only one who's recently (as in the last few years) started enforcing the MAP through warranty. It's a means of controlling the retail channel - if everyone follows the MAP it equalizes the world. An RS-1 is $695 no matter where you go. And that kills competition between your dealers, which ideally lets you sell more products. It also has a retail mark-up worked into that price so they make money by going along with the program. When someone wants to price-war with everyone over it, it makes waves, and messes with the skim.
I don't think MAP is what's killing local dealers - the fact that their overhead is too high and they aren't otherwise competitive is what's doing it. I'm all for "local business" when it doesn't disagree with legitimate free market economics (funny how politicians will bastardize "free market economics" to mean whatever they want, isn't it?) - if the market doesn't want it, the market won't carry it. If it has to be subsidized to exist, it's problematic. There's also the question of customer service - a lot of these die-hard brick-and-mortar shops are snob factories and have all sorts of screwed up unspoken policies about turning away "tawdry" customers and similar because they only want to sell high mark-up equipment and make those big whale sales. That's not how you turn a profit these days. There's a reason Wal-mart has burned down every CE retailer except Best Buy, and why they have Best Buy jumping and fetching like their heads are on fire and their...well, you know the rest.
I'm not even trying to make a political statement - it's just basic supply/demand and profit/loss. Apple, for example, has a very established BnM retail channel, and it's profitable. So BnM isn't the problem. It's the super-snob, super-high-pressure, used-car-dealer approach that "high end" has been buried under for the last 20 or so years. Most customers don't like that, they tolerate it, and they aren't happy about paying those chumps commissions. So if they can walk, they do. And before you say "no they don't" - why is Amazon the largest retailer in the world?