The Antitrust Treatment of Loyalty Discounts and Rebates in the EU Competition Law: In Search of an Economic Approach and a Theory of Consumer Harm

Samà, Danilo (2012): The Antitrust Treatment of Loyalty Discounts and Rebates in the EU Competition Law: In Search of an Economic Approach and a Theory of Consumer Harm.

Abstract

In the paper, the fundamental question is under what conditions loyalty discounts and rebates adopted by a dominant firm cause anti-competitive effects. Fidelity schemes, although extremely frequent in the market, if applied by a dominant firm, are likely to be judged as illegal per se, as demonstrated by the EU case-law delivered so far and the severe scrutiny reserved by the national competition authorities. As a result, the paper first provides an analytical overview of loyalty structures, focusing in particular on retroactive rebates, and elaborates on important economic implications, such as the lock-in and the suction effect. The work then discusses the novelties introduced by the Guidance Paper on the Application of Art. 102 of the TFEU, which calls for an effects-based analysis of exclusionary abuses. Therefore, after an in-depth evaluation of the as-efficient competitor test, the new approach of the European Commission towards loyalty discounts and rebates is discussed in details with reference to a controversial antitrust case recently examined at EU level (Tomra). The paper finally proposes a systematic economic framework for analysing the effects, and therefore the legality, of fidelity schemes, in the light of a consistent theory of consumer harm.

• Item Type: MPRA Paper
• Language: English
• Keywords: Fidelity Discounts, Loyalty Rebates, Abuse of Dominant Position, As-Efficient Competitor Test, Consumer Harm, Exclusive Dealing, Foreclosure, Monopolization, Nonlinear Pricing, Predation, Tomra
• Subjects: K - Law and Economics > K2 - Regulation and Business Law > K21 - Antitrust Law; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L12 - Monopoly ; Monopolization Strategies; L - Industrial Organization > L4 - Antitrust Issues and Policies > L42 - Vertical Restraints ; Resale Price Maintenance ; Quantity Discounts

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