A Proposed Test for Separating Pro-Competitive Conditional Rebates from Anti-Competitive Ones
Tilburg University - Tilburg Law and Economics Center (TILEC); University of Michigan Law School; Covington & Burling
December 12, 2008
While the granting of rebates is a common commercial practice largely used by dominant and non-dominant firms, the assessment of rebates is one of the most complex and unsettled areas of competition law. In the EU, the decisional practice of the European Commission and the case-law of the Community courts have been harshly criticized as unnecessarily strict, following a form-based approach that sits uneasily with modern economic theory. In response, DG COMP published in December 2005 a Discussion Paper that promotes an effects-based approach to the assessment of rebates. This approach was recently confirmed in the Guidance Paper of the Commission on Article 82 EC published by in December 2008. US courts have generally shown greater deference to conditional rebates adopted by dominant firms, but the case-law remains unsettled, notably in the area of bundled rebates. Against this background, this paper proposes an analytical framework, based on a three-step test, designed to separate pro-competitive rebates from anti-competitive ones. A particular emphasis will be placed on the treatment of single product retroactive rebates, which create complex issues.
Keywords: rebates, discounts, antitrust, competition, foreclosure, efficiencies, Article 82, Section 2, bundled rebates
JEL Classification: D4, K21, L 41, L42working papers series
Date posted: December 14, 2008
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