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Antitrust Enforcement Against Platform MFNs

22 Pages Posted: 4 Dec 2017  

Jonathan B. Baker

American University - Washington College of Law

Fiona M. Scott Morton

Yale School of Management; National Bureau of Economic Research (NBER)

Date Written: November 29, 2017

Abstract

Antitrust enforcement against anticompetitive platform most favored nations (MFN) provisions (also termed pricing parity provisions) can help protect competition in online markets. An online platform imposes a platform MFN when it requires that providers using its platform not offer their products or services at a lower price on other platforms. These contractual provisions may be employed by online platforms offering hotel and transportation bookings, consumer goods, digital goods, and handmade craft products. They have been the subject of antitrust enforcement in Europe but have drawn only limited antitrust scrutiny in the U.S. Our paper explains why MFNs employed by online platforms can harm competition by keeping prices high and discouraging the entry of new platform rivals, through both exclusionary and collusive mechanisms, notwithstanding the possibility that some MFNs may facilitate investment by limiting customer free-riding. We discuss ways by which government enforcers in the U.S. and private plaintiffs could potentially reach anticompetitive platform MFNs under the Sherman Act, and the litigation challenges such case present.

Keywords: platform MFN, pricing parity, antitrust

JEL Classification: K21, L41

Suggested Citation

Baker, Jonathan B. and Scott Morton, Fiona M., Antitrust Enforcement Against Platform MFNs (November 29, 2017). Yale Law Journal, 2018 Forthcoming. Available at SSRN: https://ssrn.com/abstract=3079530

Jonathan B. Baker (Contact Author)

American University - Washington College of Law ( email )

4300 Nebraska Avenue, NW
Washington, DC 20016
United States
202-274-4315 (Phone)

Fiona M. Scott Morton

Yale School of Management ( email )

New Haven, CT 06520
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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