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

44 Pages Posted: 16 Apr 2014

See all articles by Danilo Samà

Danilo Samà

LUISS "Guido Carli" University of Rome; Erasmus Rotterdam University; Ghent University; University of Aarhus - School of Business and Social Sciences; Toulouse School of Economics; University of Hamburg; Law & Economics LAB

Date Written: 2012

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.

Keywords: Fidelity Discounts, Loyalty Rebates, Abuse of Dominant Position, As-Efficient Competitor Test, Consumer Harm, Exclusive Dealing, Foreclosure, Monopolization, Nonlinear Pricing, Predation, Tomra

JEL Classification: K21, L12, L42

Suggested Citation

Samà, Danilo, 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 (2012). Available at SSRN: https://ssrn.com/abstract=2425100 or http://dx.doi.org/10.2139/ssrn.2425100

Danilo Samà (Contact Author)

LUISS "Guido Carli" University of Rome ( email )

Faculty of Economics
Viale Romania, 32
Rome, 00197
Italy

HOME PAGE: http://www.danilosama.com

Erasmus Rotterdam University ( email )

Campus Woudestein
Burgemeester Oudlaan, 50
Rotterdam, Zuid-Holland 3062
Netherlands

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Ghent University ( email )

Sint-Pietersnieuwstraat, 25
Ghent, 9000
Belgium

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University of Aarhus - School of Business and Social Sciences ( email )

Nordre Ringgade 1
Aarhus C, DK-8000
Denmark

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Toulouse School of Economics ( email )

Allée de Brienne, 21
Toulouse, 31015
France

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University of Hamburg ( email )

Mittelweg, 177
Hamburg, 20148
Germany

HOME PAGE: http://www.danilosama.com

Law & Economics LAB ( email )

Viale Romania, 32
Rome, 00197
Italy

HOME PAGE: http://www.danilosama.com

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