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A Most-Favoured-Customer Guarantee with a Twist

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Author Info
Pinar Akman () (Centre for Competition Policy, University of East Anglia)
Morten Hviid () (Centre for Competition Policy, University of East Anglia)

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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.

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Publisher Info
Paper provided by Centre for Competition Policy, University of East Anglia in its series Working Papers with number 05-8.

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Length: 38 pages
Date of creation: Oct 2005
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Handle: RePEc:ccp:wpaper:wp05-08

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Related research
Keywords: Most-favoured-customer guarantees; price guarantees; fairness; anti-competitive contract clauses;

Other versions of this item:

Find related papers by JEL classification:
K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Recreation; Tourism

Cited by:
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  1. Morten Hviid & Greg Shaffer, 2008. "Matching Own Prices, Rivals' Prices, or Both," Working Papers 08-26, Centre for Competition Policy, University of East Anglia. [Downloadable!]
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