Competition Law and Most Favoured Nation Clauses in Online Markets

Posted by Social Science Research Network

Competition Law and Most Favoured Nation Clauses in Online Markets

By Margherita Colangelo (Roma Tre University)

Recent antitrust enforcement in the EU has focused on the use of some peculiar forms of Most Favoured Nation (MFN) clauses by online platforms, giving rise to a wide discussion involving scholars, competition authorities and legislators. In online settings, the typical situation consists of an upstream supplier that sells its products through a downstream online platform and guarantees that the price and terms it sets for a particular product on that platform is no higher than the price and terms it sets for the same product on another platform. Whereas there is established literature on traditional MFN clauses, the same cannot be said for platform MFNs. This paper explores the peculiar features of platform MFNs and analyses them in the light of the business models adopted by online platforms (with a particular attention to digital comparison tools), examining the role of such intermediaries, how their activities may affect competition, and how the enhanced transparency typical of the Internet impacts on the markets concerned and the consumer’s trust and behaviour. After a review of the anticompetitive effects and justifications associated to MFNs in traditional and online settings, the paper focuses on the European experience and the existing cases in the field of platform MFNs, in particular concerning the investigations into the online hotel booking sector. The contribution then questions the theories of harm and the main critical issues deriving from the cases analysed and aims at highlighting the difficulties that the competitive assessment of these clauses implies. Moreover, it suggests that the combined effects of platform MFNs with other clauses, such as Best Price Guarantees, must be deeply investigated.

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