Over the last several years, the use of most favored nation clauses by health insurers has been the focus of significant antitrust scrutiny, with legislation being enacted in several states that prohibits the use of such clauses in provider contracts and the DOJ Antitrust Division taking action against the use of such clauses as well. Now, it appears that the use of such clauses in other insurance contracts may be beginning to attract attention as well. 

Specifically, the Automotive Service Association, a trade association of independent automotive service and repair professionals, recently sent a letter to the DOJ Antitrust Division urging the Antitrust Division to examine the use of most favored nation clauses by auto insurers. The association contends that the use of such clauses by national auto insurers, particularly when coupled with direct repair arrangements with other repair shops (typically those in an insurer’s “preferred” network), impedes the ability of the association’s members to compete for repair shop business from the insurers’ insureds. The association further notes that, in its judgment, many of the potential concerns about the use of MFN clauses raised at the FTC/Antitrust Division’s MFN clause symposium in September apply in the auto repair industry as well.

The association therefore urges the Antitrust Division to “continue to pursue the MFN clause issue,” and requests that the DOJ agree to a meeting with the association’s leadership to discuss how the use of most favored nation clauses allegedly impedes competition in the auto repair industry. Notably, however, most antitrust claims by independent repair shops challenging the right of an insurer to utilize a “preferred” network of repair shops, including the recent Harner v. Allstate case in the Southern District of New York, have failed, with the courts typically holding that the plaintiff could not allege antitrust injury resulting from the insurers’ practices. Whether the Automobile Service Association will have any better success in advocating its views to the Antitrust Division, and if so, where it might lead, remains to be seen. Stay tuned.