Samuelson, M., Piankov, N., & Ellman, B. (2012), Assessing the effects of most-favored nation clauses, aba section of antitrust law spring meeting 2012, www.analysisgroup.com/uploadedfiles/content/insights/publishing/samuelson_mfn_springaba_2012.pdf. Retrieved 26 June 2015. Trends in the application of most-favoured-nation clauses show the importance of the parallel use of most-favoured-nation clauses. In particular, the Commission`s enforcement efforts, such as the case of the digitisation of theatres and the case of e-books, focus on the cumulative effect of the parallel use of most-favoured-nation clauses in the sector concerned. In its HRS decision, BKartA also identified the industry-wide use of most-favoured-nation clauses for end customers and found that the use of most-favoured-nation clauses by various platform operators increases anti-competitive effects in the market. The BKartA found that, in view of the combined market shares of HRS, Booking.com and Expedia, the most-favoured-nation clauses covered almost 90% of the relevant market (FCO 2014d, paragraph 163). As mentioned above, a most-favoured-nation clause has traditionally been defined as an agreement whereby the seller accepts that the buyer receives terms at least as favourable as those offered to any other buyer (Stenger 1989; Dennis, 1995). Given the complexity of the impact of most-favoured-nation clauses on competition, analyzing the impact of most-favoured-nation clauses can pose challenges for regulators, businesses and practitioners. One way to deal with the complex landscape of most-favoured-nation regimes would be for competition authorities or courts to conduct a separate analysis of the rule of reason for each individual case. However, a purely jurisprudential approach without the help of secondary legislation has several significant drawbacks and, in our view, is an impractical alternative. To this end, this paper argues that competition authorities trying to make the most of their limited resources and available evidence and that practitioners who wish to advise their clients in the most effective manner would benefit from a guideline that addresses the different forms of most-favoured-nation clauses as well as guidelines in the form of presumptions and safe havens in this regard. which concerns the circumstances, among which most-favoured-nation clauses are more or less likely to cause anti-competitive harm by the position of the executing authority.
Open Access This article is distributed under the terms of the Creative Commons Attribution 4.0 (creativecommons.org/licenses/by/4.0/) International License, which allows unrestricted use, distribution, and reproduction on any medium, provided you specify the original authors and source accordingly, provide a link to the Creative Commons license, and indicate if any changes have been made. For the sake of clarity, these elements should not be considered as an exhaustive list, but as the essential concepts of a model. Based on the points of convergence of existing case law in different jurisdictions and the scientific literature on most-favoured-nation clauses, we propose below the content of the various issues described in the sections above. Oxera (2014). Most-Favoured-Nation Clauses: Falling Out of Favor? Available under www.oxera.com/Latest-Thinking/Agenda/2014/Most-favoured-nation-clauses-falling-out-of-favour.aspx As mentioned above, the anti-competitive potential of most-favoured-nation clauses may become even greater depending on market dynamics. In addition to providing a sound theoretical basis, by defining these specific factors, a guidance model would be able to focus competition authorities` resources on areas of increased risk and also provide advice on what to avoid for businesses and practitioners. This would be particularly useful for general practitioners or business leaders looking for concrete advice as opposed to theory. Therefore, we present below a discussion of some features of most-favoured-nation clauses that have been classified as higher in order to represent a greater likelihood of anti-competitive effects. Most-favoured-nation clauses cannot be considered static and independent of the impact they may have on the rest of the market. It is therefore important that a potential guide provides a sound theoretical basis on the relevant risks for effective guidance. Various documents examining the use of most-favoured-nation clauses or similar structures in natural gas contracts support the above discussion.
Mulherin (1986), who analysed the use of most-favoured-nation clauses and arrangements for taking or paying in the natural gas industry on the basis of contracts in the period 1940-1954, concludes that the best explanation for the application of these provisions in the given case seems to be the desire to minimise transaction costs by introducing a contractual structure that prevents opportunistic behaviour of the pipeline and at the same time timely “timely” adaptation to changing market conditions (Mulherin 1986, 112-113). Crocker and Lyon (1994) also provide empirical support for the use of most-favoured-nation clauses to introduce price flexibility into long-term contracts with high fixed costs specific to the relationship, without risking opportunistic behaviour, as opposed to clauses motivated by the desire to facilitate coercion. Footnote 12 Canes and Norman (1986) also describe the role of most-favoured-nation clauses in the natural gas industry in the same way: long-term contracts encourage investment with high fixed costs, while most-favoured-nation clauses in turn provide a cost-effective mechanism for adjusting contract prices to market conditions. Stenger, S. (1989). Most-favoured-nation clauses and monopsonic power: an unhealthy mix? American Journal of Law and Medicine, 15, 111-128. This paper first argues for the need for a guideline compared to the case-by-case approach observed in most jurisdictions and proposes a structure of useful elements that such a guideline should cover. As part of a model guideline, we then introduce a theoretical discussion on the potential positive and negative economic effects of most-favoured-nation clauses on competition, drawing on existing economic literature and antitrust jurisprudence to illustrate relevant impacts, as we believe it is important for a guideline to provide a solid theoretical context to provide context for more reasons. Specific. To create guidelines. We then identify specific market dynamics or contractual characteristics that present a high risk of anti-competitive effects and possible presumptions of illegality in order to provide more concrete guidance and greater legal transparency. Finally, the document proposes a number of safe havens that should be included in such a directive.
In particular, the CMA stated, “We have found that the general most-favoured-nation clauses mitigate price competition between PCWs compared to PMI. (…) There is little incentive for a PCW facing a competitor with a broad most-favoured-nation clause to demand better PMI prices for its retail customers from insurers, as this better price would also be passed on to the competitor. (CMA 2014, para. 58). The CMA also noted that general most-favoured-nation treatments would reduce incentives to innovate, which would reduce PCW operating costs, as these benefits could not be passed on to customers through cheaper offers and thus allow PCW to gain market share (CMA 2014, point 59, paragraph 8.41). It was also noted that the general most-favoured-nation clauses for retail customers allow PCWs to pressure suppliers to obtain higher commissions, as suppliers would not be able to respond by increasing the premiums of offers on the corresponding platform (CMA 2014, by. 8.40). The CMA has also found evidence that PMI suppliers reject offers of price reductions and commissions due to general agreements with other PCWs (CMA 2014, para. 59). The concept/clause “favoured nations” or “most favoured nations” or “most favoured nations” or “most favoured nations” is not omnipresent in entertainment contracts, but it certainly receives its fair share of use. This article will explore the purpose and functioning of fn and MFN (there is a (slight) difference!). (A note on spelling: The use of the Canadian language prefers “favored,” but to maximize our appearance in search results, this article will use the American spelling of “favored.”) In this context, a guideline could provide for threshold market shares if a most-favoured-nation clause were considered anti-competitive, thus shifting the burden of proof to the undertakings concerned in order to prove the contrary.
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