2 Competitive Intelligence | Antitrust Guidance Note. Compete fairly. We believe in a competitive, free enterprise system because it guarantees that .. companies , divisions, or operating units (e.g., from the ABB Business Intelligence . Enter into “meeting competition clauses“ with a customer as described above or other. offer sales contracts which combine the meet-or-release clause with a most- favored-customer . difficult to defend using anti-trust law. derived in Section 3. Claude d'Aspremont et Rodolphe Dos Santos Ferreira, «Meet-or-Release and Most-Favored-Customer. Clauses with Price-Quantity Competition Yield Cournot Outcomes», Économie publique/Public economics . example, the Sherman Act, Section 1, prohibiting “contract, combination or conspiracy in anti-trust law.
Business owners must be certain they understand the laws that govern relationships with competitors — which kinds of contact and activities are appropriate and which are illegal.
Three key federal laws regulate antitrust activities: This is the basic antitrust law, which states that any contract, written or implied, that acts to restrain trade may be a criminal act. This includes any agreement or understanding between competitors about which customers to serve, which prices to charge and other elements that affect the customer's ability to receive the best product at the lowest cost.
It also makes illegal any attempt to monopolize trade. These violations require only one perpetrator, who has the ability and intent to monopolize. This is a civil statute spelling out injunctive action that can be taken to recoup losses and to punish an offender through fines, often with treble damages allowed. Its wording is more explicit than the Sherman Act, spelling out specific violations. The Robinson-Patman Act, which prohibits price discrimination, is also part of this law.
Other portions deal with interlocking directorates of competing companies, mergers and acquisitions, and exclusive dealing arrangements. Federal Trade Commission Act. Although not technically an antitrust law, it prohibits unfair competition and supplements provisions of the other two acts. It can be enforced only by the FTC.
Meet-or-release contract - Wikipedia
Consequences for violating these acts can include prison sentences and significant fines, running into the millions of dollars, depending on the length of the violation and its impact.
Anyone injured by an antitrust violation also can sue for damages and recover three times the specific dollar loss plus attorneys' fees. Guidelines and hints To avoid running afoul of these laws, here are some guidelines and hints.
Some states have even tighter regulations, and there are tort considerations as well.
The Ubiquitous Most Favored Nations Clause: Old Wine in New Bottles - Lexology
Consult with your attorney for specifics. Don't discuss pricing with competitors. Never attend a meeting at which pricing will be discussed. If it comes up at a meeting, protest and follow this up in writing and leave immediately.
Don't discuss dividing or allocating customers, markets or territories with a competitor. Don't restrict the resale activity of a customer or attempt to control the customer's resale price.
How to Avoid Antitrust Violations
Don't talk to retailers about the prices they charge for your products. Don't talk to your retailer-customers about other customers or about how you sell to other customers. Don't require a customer to buy exclusively from your company. Don't require a customer to buy one product to obtain another. Don't make sales or purchases conditional on reciprocal sales or purchases. Don't suggest that a purchaser should buy from your company because your firm buys from the purchaser's company.
Don't charge different prices for the same volume of product to customers who may compete with each other. Don't disparage a competitor's product, verbally or in writing, unless you can prove your charges. These are general guidelines and are not a complete statement of the antitrust laws.
Medical Mutual of Ohio6 barred enforcement of an MFN by a large health insurance company that discouraged pharmacists from joining other networks similar to the more recent Amex case infra.
RxCare of Texas8 barred enforcement of an MFN clause designed to discourage pharmacists from joining other networks that promised additional business but offered lower reimbursement rates. Perhaps the most interesting of these cases was U. Rather, each transaction and each market represented by each transaction should be carefully considered, including an analysis of: What is the market structure and how do the parties especially the buyer fit into the market?
Does the buyer have a significant degree of market power e.
The Ubiquitous Most Favored Nations Clause: Old Wine in New Bottles
What is the purpose for the MFN? Is it simply to insure the lowest price or will it have the purpose or effect of establishing a floor to prices in the market? If the latter, will it prevent or discourage new entry into the market in competition with the buyer?
Will it restrain competition in buyer markets by preventing cost procurement competition? Is the seller a dominant player in its market with a high market share? What is the true purpose of the MFN? How strict is it? What is the length of the contract? Does the provision prevent customers on one side of a two sided market from recovery of their costs?