Common in contracts between sellers and buyers, the most typical most-favored-nation clauses (MFNs) provide that a seller will give a buyer the lowest price the seller offers. If it does offer a lower price to another buyer, the seller must offer the same price to the buyer that is party to the MFN agreement. MFNs can be beneficial to buyers, sellers and the market alike, providing discounted prices and comfort in fair pricing.
Sometimes, however, they raise antitrust concerns, and a few recent cases indicate that the government has renewed its focus on ferreting out those MFNs deemed to have anti-competitive effects.
There is an absence of case law or guidelines that clarify black-and-white rules on MFNs, so currently the question is whether a specific MFN has an anti-competitive effect.