Chilean authorities are testing an unofficial “independence rule” that forbids digital platforms from exerting further influence over how business users set their own prices through most-favored-nation clauses. Manuel Abarca Meza assesses how this rule could potentially fit into antitrust case law and whether or not it effectively weighs the risks against market efficiencies.
The rapid development of digital markets in Chile has prompted the Chilean competition authority (Fiscalía Nacional Económica or “FNE”) to better address the growing occurrence of vertical restraints. Digital platforms have begun using most-favored-nation clauses (“MFN”), which require businesses to offer the same pricing on all tech platforms.
Platforms usually incorporate these clauses to ensure their offerings are competitively priced. At first sight, an MFN operates as a guarantee for the platform that business users won’t treat their platform differently or favor other platforms. However, business users might price their products differently for many legitimate reasons. For example, there may be platform fees, special discounts offered jointly with the platform, or the need to incentivize the use of a specific distribution channel (such as the business user’s own app), all of which could trickle down to increase or reduce the prices customers pay. Nevertheless, violations of these clauses usually imply the suspension or the removal of the business user from the platform.
Traditionally, Chilean antitrust regulators have assessed whether MFNs constitute an abuse of dominant position by first considering whether the buyer and seller pass a combined 35% market share threshold. (Though, if there is evidence of a widespread use of the vertical restraint across the market, the market is treated, in practice, like a single platform.) Then, the FNE performs a traditional risk-efficiency analysis, weighing potential harms against benefits to competition. The assessment first measures the risks of an MFN facilitating coordination. From the business users’ perspective, an MFN tends to homogenize retail prices across all platforms. From the perspective of platforms, an MFN can facilitate price monitoring. Second, regulators consider whether traditional vertical restraints can also foreclose competition. For example, an MFN can make it harder for low-cost retailers to achieve enough scale to enter the market. Finally, firms have the opportunity to present their efficiencies-related defenses, addressing the pro-competitive benefits of the proposed vertical restraint. This can include preventing firms from free-riding. For example, without an MFN, consumers can use the sales experience, such as the customer service, offered by the platform but ultimately buy the product on another platform or distribution channel that offers lower prices.
However, the FNE has taken to actively prosecuting practically all vertical restraints in digital markets, expanding the traditional assessment methods. This new approach suggests that the FNE believes business users should be independent in setting their prices, without further influence from platforms.
This new “independence rule” is at odds with traditional assessments of vertical restraints that depended on risk-efficiency analysis. In this regard, it remains unclear whether this policy can become actual law. Moreover, this proposal raises questions about the new policy’s ability to properly assess risk and efficiencies from the MFNs.
Widespread use of MFNs in Chile
The Chilean digital platforms have come to rely increasingly on vertical restraints. This is the case for the markets most often assessed by the FNE: hotel accommodation apps, food delivery apps, and e-commerce platforms.
In the hotel accommodation market, Booking had a 70-80% market share and 52% of Booking’s contracts included MFNs with hotels and other accommodation providers using its platform. The FNE began an investigation in 2024 and reached a settlement with Booking this year, in which Booking agreed to eliminate most price parity clauses. During its investigation, the FNE did not acknowledge any free-riding efficiencies.
The widespread use of MFNs in cases where platforms do not hit the minimum market share complicates this traditional measurement. In the food delivery app market, no company reached the 35% market share threshold. Yet, the main local platforms together covered 60-100% of the market, and all of them included MFNs in their contracts with restaurants. The competition authority investigated and ultimately settled with the three largest platforms (Uber Eats, Pedidos Ya, and Rappi) to eliminate MFNs. According to the FNE, the cumulative effect of the widespread use of vertical restraints generated the same risks as if a sole platform with market power imposed an MFN. The FNE also did not acknowledge further efficiencies.
Lastly, in the e-commerce market, most platforms did not explicitly include MFNs in their seller contracts. However, the relationship between key account managers and sellers (including pricing suggestions that may have implied better positioning or platform-provided benefits) led to de facto MFNs. In this last case, although 84% of sellers were micro- and small-sized enterprises, the FNE still pushed back against vertical restraints. According to its findings, 73% of micro-sized enterprises’ sales and 65% of small-sized enterprises’ sales were made on a single platform. The FNE claimed that sellers on these platforms had become economically dependent on one platform (Chile recognizes abuse of economic dependence as a form of abuse of dominant position). In this context, 68.2% of sellers interviewed by the FNE argued that the loss of visibility and positioning on the platforms was a consequence of failing to follow the pricing recommendations of key account managers.
As seen, while not all platforms met the first stage of traditional assessment of vertical restraints that looks at market shares, the use of MFNs by small platforms equally increased the cumulative effect of their inclusion. This has led the FNE to move actively against them in most cases.
Independence as a competition policy
When assessing the risks and efficiencies of these vertical restraints, the FNE did not acknowledge any efficiencies gained from preventing free-riding. Instead, the FNE held (in the case of e-commerce platforms) that the only legitimate way to lower businesses’ prices would require reductions in platform fees, joint financing of rebates by platforms and business users, or the like. According to this logic, any MFN (and any other vertical restraint that limits business users’ independence) would be considered an illegal vertical restraint. Henceforth, this statement and the FNE’s practice suggest a special rule for digital markets: business users should be free to set their prices without further influence from the platform.
However, this “independence rule” is a competition policy proposal that deviates from current Chilean competition law. MFNs and vertical restraints are not per se illegal, as hard-core cartels are. Vertical restraints are assessed as potential abuse of dominant position, requiring proof of anticompetitive effects. Furthermore, Chilean competition law does not include special rules for digital markets.
Therefore, the FNE’s policy toward vertical restraints in digital markets operates in a gray area. There are several pathways for it to become established law. A first option would be to take MFNs to court, using the traditional competition assessment. The Chilean Competition Court imposes sanctions on undertakings, following public enforcement by the FNE or private enforcement by individuals.
In this case, it remains unclear how the FNE can fulfil the legal requirements to argue for an independence rule using the traditional framework (especially on dominance and effects). The cases involving hotel accommodation apps, food delivery apps, and e-commerce platforms also involved mature, concentrated markets, where the effects of MFN clauses can be stronger. Applying their precedent to nascent markets would ignore the pricing strategies required to scale up and the lower barriers to entry, in the context of high uncertainty about market outcomes.
A second option would consist of a legal reform to the Chilean Competition Act. However, this seems unlikely. The FNE explicitly held that the current law can address challenges in digital markets without the need for ex-ante regulation that proscribes certain activities or other legal reforms. According to the competition authority and some scholars, traditional enforcement under Chilean competition law can easily handle cases like these in digital markets.
As seen, adopting the “independence rule” as case law or law remains difficult.
The scope of MFNs
The “independence rule” raises a further question: can platforms not treat business users that price their products and services differently on their platform uniquely at all?
Two recent Chilean cases clarify the FNE’s position. First, the FNE sued a delivery platform (Pedidos Ya) for infringing the terms of the previous settlement by imposing MFNs. However, this case is apparently different: a restaurant could lose better positioning in search results on Pedidos Ya if its prices on the platform were higher than at its physical store. For example, if the restaurant offered the same prices on its platform listing as on its physical menu, a label would appear on the business user’s profile page in the app indicating this feature. If it did not, it would lose the label and might fall in visibility as stores with the label appeared first on the list. However, the seller would not be subject to suspension or elimination from the platform. Second, when the FNE settled with Booking to eliminate price parity clauses, hotels that violated the clause lost visibility only under a general algorithm that factored in prices, but were not suspended or removed from the platform.
These cases blur the line between contractual MFNs, in which infringement involves the suspension or elimination of the platform, and de facto MFNs, which are commercial practices that can have the same economic effect as a contractual MFN. In these situations, the business user would have the freedom to set its prices. However, if the business users did not have the same prices in their physical stores, they would lose visibility on the platform and would only be subject to organic positioning (based on price, sales level or further paid positioning).
The decisive factor in how to treat these border cases is whether inorganic visibility is essential to business competitiveness. If this is the case, the price parity clause would indeed constitute a de facto MFN. Business users would have incentives to comply with the clause. If not, the price parity clause would not influence the pricing conduct by business users. Organic visibility, based on price, quality, and other competitive factors (or paid positioning, in its case), would be the general rule in any case.
In other words, the legality of these provisions involves assessing their effects. Therefore, an “independence rule” would collide with the traditional effect-based approach to vertical restraints in these cases, since it does not address risks or efficiencies. In any case, this policy proposal can explain the active approach to price parity clauses, whose qualification as an MFN is not clear at first sight (in terms of the actual influence of positioning on the pricing mechanisms of business users).
Conclusions
In sum, the Chilean competition authority advocates for a special rule for local digital markets: business users should be free to set their prices without further influence from platforms. This view derives from the FNE’s current practice regarding the enforcement of MFNs in local massive digital markets. The “independence rule” is explained by the widespread use of MFNs in these mature and concentrated markets.
However, this rule remains a proposal rather than law. At first glance, it does not include a broader assessment of risks and efficiencies. Therefore, it remains unclear how this “independence rule” can be converted into case law or actual law.
In any case, the Chilean approach to digital vertical restraints raises interesting questions for broader competition policy and competition law: can this policy be based on current competition law, or will it eventually require substantiation in the courts or a new digital regulation? Is the independence of business users in itself a goal of competition policy, or is the goal their competitiveness and ability to help maintain a structurally competitive market?
Authors’ Disclosures: The author reports no conflicts of interest. You can read our disclosure policy here.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
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