Both in the automotive and other industries, parties have turned
to most favored nation (MFN) clauses—or clauses having the
same effect—as a means to assure the lowest possible input
costs. MFN clauses offer pro-competitive, cost-saving benefits
including efficiencies in negotiations; buyers need not haggle for
the last nickel in cost reduction when an MFN clause guarantees the
best available price. Despite these pro-competitive benefits, MFN
clauses have drawn increased scrutiny for their possible misuse and
potential for creating antitrust exposure.
DOJ's Growing Concerns
Our last
article regarding MFN pricing provisions reviewed the growing
debate among antitrust practitioners over whether such provisions
are pro-competitive or anticompetitive. We noted the Department of
Justice Antitrust Division's (DOJ) concerns over such
provisions when imposed by a buyer with a large market share.
Indeed, the DOJ had filed several antitrust actions alleging that
particular
