A Most-Favoured-Customer Guarantee with a Twist

Pinar Akman () and Morten Hviid
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Pinar Akman: Centre for Competition Policy, University of East Anglia

No 05-8, Working Papers from Centre for Competition Policy, University of East Anglia

Abstract: This paper demonstrates that the Most-Favoured-Customer (MFC) clause identified in the Monopolies and Mergers Commission (MMC) Report on 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 (search for similar items in EconPapers)
JEL-codes: K12 K21 L41 L42 L83 (search for similar items in EconPapers)
Date: Written
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