DOJ-FTC Highlight MFN Clauses
WASHINGTON, D.C., April 29, 2013 – The U.S. Senate Committee on the Judiciary’s Subcommittee on Antitrust, Competition Policy and Consumer Rights recently held a hearing titled “Oversight of the Enforcement of the Antitrust Laws.” Witnesses at the hearing included the Hon. William Baer, assistant attorney general for the antitrust division of the U.S. Department of Justice; and the Hon. Edith Ramirez, chairwoman of the Federal Trade Commission.
Baer discussed the U.S. Department of Justice’s interest in Most Favored Nation clauses (MFN) in his testimony:
“One area of focus for us and for the FTC is so-called “most favored nation clauses” (MFNs). Such provisions potentially distort the competitive process by raising the costs of health insurance and hospital services, preventing other insurers from entering the market and discouraging discounts.
“This combination of enforcement and public discussion has shined a spotlight on the problems MFNs can cause, leading a number of states to take a hard look at these practices: On March 18, 2013, the state of Michigan enacted a statute to ban the use of MFNs in health care provider contracts, becoming the latest in a growing list of states that statutorily restrict or prohibit such provisions.”
The Automotive Service Association (ASA) expressed to Michigan policymakers that their MFN legislation should include property and casualty insurers. Baer also discussed the antitrust division’s specific work with auto parts in his testimony:
“The division’s ongoing auto parts matter is the widest-ranging criminal investigation in division history. We have uncovered conspiracies spanning over a decade and involving numerous auto parts suppliers. These companies have rigged bids and fixed prices for critical parts of autos sold in the U.S. – including safety systems such as seatbelts, airbags, steering wheels, antilock brake systems, instrument panel clusters and electric wire harnesses. Thus far, nine corporations have admitted their participation and paid fines of more than $800 million, and 12 executives have pleaded guilty and have been sentenced to serve significant prison sentences. The investigation continues.”
Ramirez also touched on MFNs in her testimony and discussed a workshop ASA attended in 2012:
“The agencies recently co-hosted two workshops: one exploring the antitrust implications of most-favored-nation clauses and … another exploring the impact of patent assertion entities. The Commission understands the special obligation of the law enforcement agencies to speak with one voice whenever possible in important areas of U.S. antitrust policy, and to work in tandem to promote the interests of American consumers.”
ASA participated in the joint DOJ-FTC MFN workshop last year. ASA contacted the U.S. Department of Justice last fall about the impact of MFN clauses on consumers and collision repair facilities.
To view the testimony from the U.S. Senate Judiciary Committee hearing in its entirety, or to see the letter ASA sent to the DOJ last fall regarding MFN clauses, please visit ASA’s legislative website at www.TakingTheHill.com.
The Automotive Service Association is the largest not-for-profit trade association of its kind dedicated to and governed by independent automotive service and repair professionals. ASA serves an international membership base that includes numerous affiliate, state and chapter groups from both the mechanical and collision repair segments of the automotive service industry.
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