The Automotive Service Association (ASA) recently sent a letter to the Assistant Attorney General for the Antitrust Division at the U.S. Department of Justice, asking for a review of the Most Favored Nation (MFN) clauses used in many direct repair agreements. ASA collision members brought this issue to the attention of the ASA Collision Division Operations Committee, expressing concern that many of these direct repair agreements, offered by insurance companies, included MFN or “Most Favored Customer” clauses.
The Department of Justice and the Federal Trade Commission (FTC) have previously made the following comments regarding MFNs:
“The most commonly used MFN provisions guarantee a customer that it will receive prices that are at least as favorable as those provided to other buyers of the same seller, for the same products or services. Although at times employed for benign purposes, MFNs can, under certain circumstances, present competitive concerns. This is because they may, especially when used by a dominant buyer of intermediate goods, raise other buyers’ costs or foreclose would-be competitors from accessing the market. Additionally, MFNs can facilitate collusion and stabilize coordinated pricing among sellers.”
MFN clauses appear in a number of agreements offered by major national insurance companies and some insurance companies that are only well-known in particular states. ASA noted the potential harmful, anti-competitive impact of these clauses on consumers and collision shops. The Department of Justice has already expressed interest in MFN clauses in recent litigation and on Capitol Hill. ASA participated in a workshop on MFN clauses earlier this year hosted by the Justice Department and the FTC. ASA maintains that the anti-competitive nature of the clauses puts both consumers and collision shops at a disadvantage.
More information:
To view ASA’s letter sent to the Assistant Attorney General of the Antitrust Division of the Department of Justice and related documents, visit ASA’s legislative website at www.TakingTheHill.com.
