Most-Favored-Nation Clauses in Commercial Contracts: Legal and Economic Analysis and Proposal for a Guideline

Eur J Law Econ (2016) 42:129–155

27 Pages Posted: 27 Mar 2018 Last revised: 1 Apr 2018

See all articles by Gonenc Gurkaynak

Gonenc Gurkaynak

ELIG Gürkaynak Attorneys-at-Law

Ayse Guner Donmez

University of California Los Angeles

Sinan Diniz

Esin Attorney Partnership

Janelle Wrigley

Independent

Date Written: 2016

Abstract

The prevalent use of ‘‘most favored nation’’ (MFN) clauses in commercial agreements has garnered significant attention in the economics and legal literature and by practitioners and enforcement agencies. From an antitrust standpoint, there is a strong consensus that while MFN provisions can lead to procompetitive outcomes or at least play a competitively neutral role, they may also result in competitive harm and a loss of consumer welfare. Therefore, US and EU enforcement agencies and courts have held that MFNs should be reviewed on a case-by-case basis, considering the specific characteristics of both the contractual provision and the industry. While a case-by-case approach is valid, it is not ideal from a variety of standpoints: that of the competition authorities seeking to make best use of their limited resources and that of practitioners seeking to advise their clients. Accordingly, published guidelines on the use of MFNs, containing presumptions and safe harbors, would be both efficient and useful. The paper argues that it would increase the efficiency and accuracy of antitrust enforcement if one of the leading competition authorities issued MFN guidelines. The paper suggests a set of presumptions and safe harbors that should be included in any such guidelines.

Keywords: Most Favored Nation Clause, MFN, Most Favored Customer Clause, MFC, Best Price Clauses, Price Parity Clauses

JEL Classification: K21, L41, L42

Suggested Citation

Gurkaynak, Gonenc and Güner Dönmez, Ayşe and Diniz, Sinan and Wrigley, Janelle, Most-Favored-Nation Clauses in Commercial Contracts: Legal and Economic Analysis and Proposal for a Guideline (2016). Eur J Law Econ (2016) 42:129–155, Available at SSRN: https://ssrn.com/abstract=3150371

Gonenc Gurkaynak (Contact Author)

ELIG Gürkaynak Attorneys-at-Law ( email )

Çitlenbik Sokak No:12
Yıldız Mahallesi
Istanbul, Beşiktaş 34349
Turkey

Ayşe Güner Dönmez

University of California Los Angeles ( email )

10920 Wilshire Blvd
Los Angeles, CA 90024
United States

Sinan Diniz

Esin Attorney Partnership ( email )

Ebulula Mardin Cad., Gül Sok. No. 2
Maya Park Tower 2
Akatlar-Beşiktaş, Istanbul 34335
Turkey

Janelle Wrigley

Independent ( email )

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