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A Most-Favoured-Customer Guarantee with a Twist

Listed author(s):
  • Pinar Akman


    (Centre for Competition Policy, University of East Anglia)

  • Morten Hviid


    (Centre for Competition Policy, University of East Anglia)

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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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
Handle: RePEc:ccp:wpaper:wp05-08
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