April 30, 2013—The U.S. Senate Committee on the Judiciary’s Subcommittee on Antitrust, Competition Policy and Consumer Rights recently discussed the U.S. Department of Justice’s interest in Most Favored Nation (MFN) clauses in a hearing titled “Oversight of the Enforcement of the Antitrust Laws.”
Witnesses at the hearing included William Baer, assistant attorney general for the antitrust division of the U.S. Department of Justice, and Edith Ramirez, chairwoman of the Federal Trade Commission.
Baer addressed MFN clauses in his testimony:
“One area of focus for us and for the Federal Trade Commission is so-called 'most favored nation clauses.' 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.”
Baer also discussed the antitrust division’s 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 noted two workshops recently co-hosted by the Department of Justice and the Federal Trade Commission exploring the antitrust implications of MFN clauses and the impact of patent assertion entities.
To view the testimony from the hearing in its entirety, visit takingthehill.com.
