Price Discrimination in the Postal Sector and Competition Law
Tilburg University - Tilburg Law and Economics Center (TILEC); University of Michigan Law School; Covington & Burling
July 20, 2010
Price discrimination is pervasive in all sectors of the economy. Businesses, including postal operators, use price discrimination to stimulate demand. Given the downward pressure on mail volumes due to electronic alternatives, postal operators have had to respond rapidly and effectively. Postal operators, for instance, adopt pricing strategies designed to stimulate demand by offering rebates and other forms of price incentives to their business counterparts. The present paper analyses the extent to which these price discrimination strategies raise competition law issues and, if so, how these issues have been dealt with by competition law authorities and courts.
One of the difficulties for competition lawyers and economists is that price discrimination is a polymorphic concept that covers a variety of practices, which are not necessarily apprehended by the same competition rules and principles. For competition lawyers, price discrimination typically covers pricing conduct falling within the scope of Article 102(c) of the Treaty on the Functioning of the European Union (hereafter, the “TFEU”), which considers as an abuse the fact for one or several firms holding a dominant position of “applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage.” By giving a better price to Customer A than customer B, dominant firm X may thus place Customer B at a competitive disadvantage. When selling at different prices is objectively justified by the fact that customers are “differently situated” (which is often the case), the practice in question does not fall within the scope of Article 102(c). This practice may, however, fall within other sections of Article 102, when they have exclusionary effects. Rebates may have such effects when they are set in such a way that they exclude “as efficient competitors.”
Price discrimination schemes are common in the postal sector and some such schemes have come under the scrutiny of the European Commission (hereafter, the “Commission”) and the national competition authorities. More recently, the adoption of preferential tariffs by a number of postal operators to the benefit of large mail senders has been a source of controversy, especially when the benefit of such schemes is not extended to mail intermediaries, such as “mail preparers” and “aggregators.” In this respect, an Opinion rendered by the French Competition Council (the Conseil) on 20 December 2007 in relation to the institution of a rebate scheme envisaged by La Poste, and the French court decisions rendered on such scheme, have generated a lot of attention. This paper will thus devote significant space to this Opinion and these decisions. It will also discuss the judgment of the Court of Justice of March 2008 in the Dedat Deniz case concerning the interpretation to be given to Article 12(5) of Directive 97/67, which is of direct relevance to the issues addressed in the French Opinion and court decisions.
This paper is organized as follows. It first discusses the concept of price discrimination from an economic and an EU competition law perspective (Parts II and III). The paper then examines price discrimination in the postal sector by reviewing a number of postal cases in which price discrimination claims were made. This section will focus almost exclusively on rebate pricing schemes and how they are treated under EU competition law (Part IV). Price discrimination in France – where the postal incumbent La Poste has often been under antitrust scrutiny – will then be looked at. In particular, this paper will discuss the Opinion rendered by the Conseil on 20 December 2007 in relation to the institution of a rebates regime envisaged by La Poste. It will also look at judgments adopted by the French civil courts on this subject, as well as the judgment of the CJ in Dedat Deniz (Part V). Finally, a brief conclusion is provided (Part VI).
working papers series
Date posted: July 20, 2010
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