Does price parity mean price increase when it comes to most favoured nation clauses? Rebecca Owen-Howes reports
Most favoured nation (MFN) clauses (also referred to as most favoured customer clauses) are contractual obligations by one party to offer its best terms to another party. Under a MFN, the seller promises Buyer A that it will not offer Buyer B better terms unless it first offers those, or better terms, to Buyer A. The term MFN also includes price parity agreements, where products are sold on different platforms (often relevant in the context of internet selling).
In the past, competition authorities, including the European Commission, have not appeared to be overly concerned with MFN clauses. The general consensus among competition practitioners was that such provisions could benefit competition by reducing supply chain costs, transaction costs and delays. In the last 10 years or so, however, MFN clauses have started to attract the concern that they may be used to achieve anti-competitive objectives or have an anti-competitive effect. In particular, when in the hands of a dominant buyer of intermediate goods, MFN clauses
