June 23, 2014—The Automotive Service Association (ASA) collision leaders met last week with congress to discuss the negative effects of the Most Favored Nation (MFN) Clause.
Companies or countries may be granted the status of a “most favored nation,” which is often enforced by the World Trade organization. The MFN Clause is an agreement where a seller promises a buyer it will not offer another buyer better terms, according to Practical Law, a Thomson Reuters company.
The benefits of the MFN Clause may include cost savings for buyers that can be passed down to other buyers and customers. Negative implications may include discouraging price cutting or even encouraging monopolies, according to Practical Law.
“We were encouraged by the interest in Washington, D.C., and look forward to continued conversations with our representatives,” said Dan Risley, ASA president and executive director. “Most Favored Nation clauses are harmful to consumers, shops and some insurers. Michigan has recognized the damage these clauses can do in a marketplace and acted accordingly with regard to health insurance. This same reasoning should apply to vehicle repair, and property and casualty insurance. This is the single most important issue we have in the collision repair industry today.”
For more information about the ASA’s legislative endeavors, visit TakingTheHill.com.
