Antitrust Enforcement Against Platform MFNs
abstract. Antitrust enforcement against anticompetitive platform most favored nations (MFN) provisions (also termed pricing parity provisions) can help protect competition in online markets. An online platform imposes a platform MFN when it requires that providers using its platform not offer their products or services at a lower price on other platforms. These contractual provisions may be employed by a variety of online platforms offering, for example, hotel and transportation bookings, consumer goods, digital goods, or handmade craft products. They have been the subject of antitrust enforcement in Europe but have drawn only limited antitrust scrutiny in the United States. Our Feature explains why MFNs employed by online platforms can harm competition by keeping prices high and discouraging the entry of new platform rivals, through both exclusionary and collusive mechanisms, notwithstanding the possibility that some MFNs may facilitate investment by limiting customer freeriding. We discuss ways by which government enforcers in the United States and private plaintiffs could potentially reach anticompetitive platform MFNs under the Sherman Act, and the litigation challenges such cases present.
authors. Jonathan B. Baker is Research Professor of Law at American University Washington College of Law; and Fiona Scott Morton is the Theodore Nierenberg Professor of Economics at Yale University School of Management. The authors are indebted to M.J. Moltenbrey and Steve Salop. Both authors worked on the e-books antitrust litigation involving Apple for government plaintiffs. Neither author received financial support for work on this Feature.