Loyalty Discounts And The FTC’s Lawsuit Against Intel

Abstract

Loyalty discounts pervade our economy, but may expose unsuspecting businesses to antitrust liability. This paper explains that the antitrust law governing these discounts is unclear, confusing, and constantly changing. The structure of the loyalty discount will determine how a court is likely to analyze it, choosing from one or more of the following frameworks: predatory pricing, leveraging, and foreclosure. The Federal Trade Commission's recent lawsuit against Intel (now settled) made the landscape for businesses even less certain by advancing theories under both Section 5 of the FTC Act and Section 2 of the Sherman Act that are not supported by existing antitrust law.

Keywords: Antitrust, Loyalty Discounts, Federal Trade Commission, FTC, Bundling, Predatory Pricing, Linkline, Brooke Group, Leveraging, Monopoly, Monopolization, Exclusionary Conduct, Discount Attribution, Foreclosure, Market-Share Discounts, Exclusive Dealing, Intel, Sherman Act, Section 5 of the FTC Act