Stuart Senator and Rebecca Sciarrino Pen Article Discussing Potential Antitrust Risks Associated with ‘Most-Favored-Nation’ Contract Clauses
Munger, Tolles & Olson partner Stuart Senator and associate Rebecca Sciarrino co-authored an article titled “Most-Favored-Nation Clauses Are Not Always Antitrust’s Favorite,” published by the Daily Journal.
The article discusses Most-Favored-Nation clauses (MFNs), their benefits and the circumstances under which they could pose antitrust risks. MFN clauses require one contracting party to provide terms that are at least as favorable as those given to any third party. Originating from international agreements, MFNs are present in various contracts like licensing, manufacturing, real estate, litigation settlements, entertainment and employment.
In the article, Mr. Senator and Ms. Sciarrino note that while MFNs are often seen as procompetitive, they have faced increasing antitrust scrutiny in recent years. The authors identify four key questions that recent antitrust litigation suggest should be considered in evaluating the antitrust risk that a potential MFN would present:
- Will the MFN lead to communication among competitors on competitively sensitive subjects?
- Will the MFN cause upward pressure on pricing?
- Will the MFN inhibit non-price forms of competition?
- Does the party imposing the MFN and receiving MFN status have market power?
Read the full Daily Journal article. (Subscription may be required)