A Most-Favoured-Customer Clause With a Twist

"The article is organised as follows. Section B provides a general introduction to the pro- and anti-competitive effects of MFC clauses. The MFC clause in Thomson was unusual in both form and effect. These peculiarities are explored further in section C, where we first demonstrate that the MMC mislabelled the guarantee in this case. We then go on to identify the anti-competitive effects of the clause used by Thomson and Airtours and show that the source of these effects is the linkage created between final prices via identical discounts, not the method of funding these discounts. Section D considers the specific case in detail, arguing that the MMC did not make clear the source of the anti-competitive effects. However, the MMC was right about the anti-competitive effects, and we also use the analysis in section C to demonstrate why the Court of Appeal was wrong in its conclusion as to when the clause was harmful. Moreover, one avenue is provided for defending the clause by focusing on its potential fairness aspects rather than on its ability to sustain anti-competitive prices. Section E illustrates that the clause in Thomson is not an isolated event and that the results in this article apply to a larger set of cases. Finally, section F concludes by highlighting the importance of sound economic analysis in order to make decisions robust to future appeals."