The authors discuss cases concerning most-favored nation clauses in this article for Competition Policy International’s Antitrust Chronicle.
Despite high-level statements to the contrary, economics does suggest some rules of thumb that can help determine if most-favored nation clauses (MFNs) are likely to be pro- or anticompetitive. While every negotiation will have its own nuances, a good starting point is to ask where the incentive to offer a better price is expected to come from and what source of power makes the MFN an effective constraint against following such incentives.
To illustrate how the answers to those questions are likely to affect antitrust risk, authors Bob Majure and Andrew Sfekas examine the economics behind MFN clauses that have featured in various recent cases.
This article was originally published by Competition Policy International’s Antitrust Chronicle in September 2019.
The views expressed herein do not necessarily represent the views of Cornerstone Research.
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