Competitive effects of most-favoured nation clauses
Produced in partnership with Dentons

The following Competition practice note produced in partnership with Dentons provides comprehensive and up to date legal information covering:

  • Competitive effects of most-favoured nation clauses
  • Brexit
  • Types of MFNs
  • Economic rationale of MFNs
  • Theories of harm
  • Enforcement activities
  • E-books I
  • Amazon / E-books II
  • Private motor insurance
  • Online hotel booking sector
  • More...

Competitive effects of most-favoured nation clauses

Most-favoured nation clauses (MFNs, also called parity clauses) are vertical arrangements whereby the terms and condition of supply are set by reference to the terms and conditions applicable to other supply relationships.

MFNs have come under the scrutiny of antitrust authorities in the EU, in particular in the online space (eg E-books I, Amazon/E-books II, Booking.com, etc). But these cases do not mean that MFNs are systematically anti-competitive. In fact, their competitive effects are often ambivalent and require a careful case-by-case analysis.

Brexit

Prior to the expiry of the Brexit transition period on 31 December 2020, a breach of Article 101 TFEU was directly enforceable by the CMA. After the end of the Brexit transition period, future competition law assessment involving the UK and EU markets must consider UK and EU individually (see further, The effect of Brexit on UK competition law).

Types of MFNs

The concept of MFNs covers a wide range of business configurations. MFNs can be classified in different ways:

  1. across-sellers MFNs and across-customers MFNs

    1. across-sellers MFNS are agreements whereby the seller’s price is constrained by the price charged by rival sellers; in particular, the seller undertakes that, if the buyer finds a rival seller offering the same product at better terms, the seller will match or beat those terms

    2. across-customers MFNs are agreements whereby the seller’s price is constrained by

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