While the term Most Favored Nation (MFN) clause may appear to refer to some international trade agreement, these clauses do have an important meaning for the collision industry. MFN clauses in direct repair agreements (DRP) between insurers and collision repair facilities guarantee an insurer that it will receive prices that are at least as favorable as those provided to other carriers doing business with the collision repair facility for the same products or services. MFN clauses can, under certain circumstances, present competitive concerns. One instance is when the MFN clause is used by a dominant buyer of intermediate goods, raising other buyers' costs or foreclosing would-be competitors from accessing the market.
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