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A Most-Favoured-Customer Guarantee with a Twist

Author

Listed:
  • Pinar Akman

    () (Centre for Competition Policy, University of East Anglia)

  • Morten Hviid

    () (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.

Suggested Citation

  • Pinar Akman & Morten Hviid, 2005. "A Most-Favoured-Customer Guarantee with a Twist," Working Papers 05-8, Centre for Competition Policy, University of East Anglia.
  • Handle: RePEc:ccp:wpaper:wp05-08
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    File URL: http://www.ccp.uea.ac.uk/publicfiles/workingpapers/CCP05-8.pdf
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    More about this item

    Keywords

    Most-favoured-customer guarantees; price guarantees; fairness; anti-competitive contract clauses;

    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; Restaurants; Recreation; Tourism

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