The U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) held a workshop recently on most-favored-nation (MFN) clauses and antitrust enforcement and policy in Washington, D.C.
Like this article? Sign up to receive our weekly news blasts here.Prior to the workshop, the DOJ and the FTC noted: “The most commonly used MFN provisions guarantee a customer that it will receive prices that are at least as favorable as those provided to other buyers of the same seller, for the same products or services. Although at times employed for benign purposes, MFNs can, under certain circumstances, present competitive concerns. This is because they may, especially when used by a dominant buyer of intermediate goods, raise other buyers’ costs or foreclose would-be competitors from accessing the market. Additionally, MFNs can facilitate collusion and stabilize coordinated pricing among sellers.”
This pertains to the collision industry because some insurance companies, such as State Farm, have MFN clauses in their direct repair programs that require repairers to give State Farm as favorable pricing as they give to other insurance companies.
The workshop included seminars and panels on the economic theories regarding MFNs and the harms and efficiencies they involve, the empirical evidence on effects of MFNS, legal treatment of MFNs, the use of MFNs in the real world, and how thinking about MFNs has evolved and where it might go.
The Automotive Service Association (ASA) participated in the workshop. Bob Redding, ASA’s Washington, D.C., representative, said: “Clearly federal regulators have an interest in MFN clause policy. What was evident from the workshop is that public policy regarding MFN clauses is still evolving. There are a number of outstanding questions such as whether these clauses – in many business sectors a common practice – have a net benefit for consumers. The FTC and the DOJ have a difficult task in determining how to regulate MFN clauses in order to protect consumers and small businesses.”
The Automotive Service Association is the largest not-for-profit trade association of its kind dedicated to and governed by independent automotive service and repair professionals. ASA serves an international membership base that includes numerous affiliate, state and chapter groups from both the mechanical and collision repair segments of the automotive service industry.
ASA advances professionalism and excellence in the automotive repair industry through education, representation and member services.
For additional information about ASA, including past news releases, go to www.ASAshop.org, or visit ASA’s legislative website at www.TakingTheHill.com.
