Competition and the Most Favored Nation Clause

Posted by D. Daniel Sokol

Jason J. Wu & John P. Bigelow (Compass Lexecon) discuss Competition and the Most Favored Nation Clause

ABSTRACT: In her recent decision in the eBook price-fixing case U.S. District Court Judge Denise Cote identified the Most Favored Nation (“MFN”) clause in Apple’s contracts with book publishers as a component of the price-fixing conspiracy in which she found Apple and the publishers had engaged. This was a significant moment in the history of the controversial agreements because, up until then, defenders of MFN agreements had been fond of observing that no court had ever found an MFN to be anticompetitive. Now that the MFN has been implicated, we can expect that disputes over the competitive effects of MFN clauses will come up in more cases, and that the debate about them will continue among economists, attorneys, and antitrust practitioners.