A Most-Favoured-Customer Guarantee with a Twist

CCP Working Paper No. 05-8

38 Pages Posted: 28 Jun 2006

See all articles by Morten Hviid

Morten Hviid

University of East Anglia - Centre for Competition Policy (CCP); University of East Anglia (UEA) - Norwich Law School

Pinar Akman

School of Law, University of Leeds

Abstract

This paper demonstrates that the Most-Favoured-Customer (MFC) clause identified in the Monopolies and Mergers Commission (MMC) Report of Foreign Package Holidays behaves not like an MFC but rather as if it was a variant of a so far unstudied price matching guarantee. This provides a clearer explanation than that by the MMC of why the guarantee is not in the public interest. The subsequent Court of Appeal decision focused attention on whether or not the MFC came with matching funding. It correctly identified that this made a difference, but was wrong in claiming that with matching funding the MFC would benefit consumers. As a result, the latest Foreign Package Holidays Order still does not provide the necessary prohibition of MFC clauses.

Keywords: Most-favoured-customer guarantees, price guarantees, fairness, anti-competitive contract clauses

JEL Classification: K12, K21, L41, L42, L83

Suggested Citation

Hviid, Morten and Akman, Pinar, A Most-Favoured-Customer Guarantee with a Twist. CCP Working Paper No. 05-8 , Available at SSRN: https://ssrn.com/abstract=911580

Morten Hviid (Contact Author)

University of East Anglia - Centre for Competition Policy (CCP) ( email )

UEA
Norwich Research Park
Norwich, Norfolk NR47TJ
United Kingdom

University of East Anglia (UEA) - Norwich Law School ( email )

Norwich NR4 7TJ, Norfolk
United Kingdom

Pinar Akman

School of Law, University of Leeds ( email )

Leeds, LS2 9JT
United Kingdom

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