Most Favoured Customer Disclosure
A contract clause requiring suppliers to disclose whether they offer better pricing to other customers; alternative to MFC clauses.
Definition
Most Favoured Customer Disclosure (MFCD) is a contract clause requiring suppliers to disclose whether they offer better pricing to other customers for comparable goods or services. MFCD is an alternative to traditional Most Favoured Customer (MFC) clauses: rather than requiring the supplier to match best pricing, MFCD requires disclosure of comparable pricing and lets the buyer decide whether to renegotiate. MFCD is increasingly preferred over MFC in some public sector contexts because it provides transparency without the unintended market effects of MFC.
How it works in practice
MFCD operates through contract obligations on the supplier: at agreed intervals (typically annually or on renewal) the supplier must disclose whether their pricing for comparable goods or services to other customers is materially better than the prices charged to this buyer. The buyer can then decide whether to renegotiate, accept the current pricing, or take other action. MFCD is less commercially constraining than full MFC: suppliers can still differentiate pricing across customer segments based on volume, commitment, or service differences, but the buyer has visibility of comparable customer pricing. Public sector adoption has been mixed: some buyers prefer the transparency MFCD provides without the rigidity of MFC; others prefer no MFCD or MFC clause at all, relying on competitive procurement to drive pricing. The Procurement Act 2023 transparency regime is making procurement pricing more visible through Award Notices and Transparency Notices; some MFCD-style benefits emerge naturally through the published procurement data without specific contract clauses. For suppliers MFCD clauses require careful customer segmentation discipline: if you offer materially better pricing to a competitor customer, expect the public sector buyer to find out and to want similar terms.
Common questions
Is MFCD common in UK public procurement?
Mixed adoption. Some buyers favour MFCD over traditional MFC for the transparency it provides without commercial rigidity. Others rely on competitive procurement to drive pricing without specific MFCD clauses. The Procurement Act 2023 transparency regime provides some MFCD-style benefits through published pricing data.
How is MFCD different from MFC?
MFC requires the supplier to offer the buyer pricing at least as good as the supplier's best customer pricing. MFCD requires the supplier to disclose comparable pricing to the buyer who can then decide whether to renegotiate. MFCD is less commercially constraining but provides similar transparency.
Can MFCD obligations be limited to specific customer segments?
Typically yes. MFCD clauses usually specify which customer types or segments are in scope (similar size, similar sector, similar contract structure) rather than requiring blanket disclosure across all customers. The specific scope is contract-by-contract negotiation.