EU Competition Law and Policy - compal

Rebates
©Ariel Ezrachi, December 2012
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The European law concerning rebates generally distinguishes between quantity discounts, which
are linked solely to the volume of purchases from the manufacturer concerned, and loyalty
inducing rebates. Whereas the former are considered valuable and acceptable components of
price competition, the latter are held to be abusive. The traditional analysis of loyalty rebates, as
evident from the cases below, has been criticised as too formalistic, failing to take into account
the effects different discount schemes have on competition. In its Guidance Paper, the
European Commission has advanced a more nuanced ‘effects-based approach’. That approach
was manifested, to some extent, in the Commission’s decisions in Prokent/Tomra and Intel
Corporation. However, the Court of Justice of the European Union has yet to endorse it (T-
155/06, appeal pending C-549/10 P).
85/76 Hoffmann-La Roche & Co. v Commission
322/81 Nederlandsche Banden Industrie Michelin v Commission
T-203/01 Manufacture française des pneumatiques Michelin v Commission
T-219/99 British Airways v Commission
C-95/04 British Airways v Commission
T-155/06 Tomra Systems and Others v Commission
COMP/C-3/37.990 Intel Corporation
T-66/01 Imperial Chemical Industries Ltd v Commission
Margin Squeeze
Margin squeeze (also known as price squeeze) refers to a situation where a vertically integrated
dominant undertaking engages in a strategy which aims to favour its own downstream
operations. The strategy may, for example, take place when the dominant undertaking supplies
input both to its own downstream operation and to other competitors in the downstream market
and increases the price charged to competitor, to squeeze their profit and improve the position
of its own downstream operation.
C-280/08 P Deutsche Telekom AG v Commission
1016/1/1/03 Genzyme Limited v Office of Fair Trading
COMP/38.784 Wanadoo España v Telefónica
C-52/09 Konkurrensverket v TeliaSonera Sverige AB
Excessive Pricing
A dominant undertaking may choose to take advantage of its market power and increase the
price of its products above competitive levels. Such practice may amount to an abuse of a
dominant position when it involves the imposition of unfair purchase or selling prices or the
application of dissimilar conditions to equivalent transactions.
Excessive prices may be analysed using two of the sub-sections in Article 102 TFEU. Under
Article 102(a) TFEU they may be challenged when they consist of: ‘directly or indirectly
imposing unfair purchase or selling prices or other unfair trading conditions’. Under Article
102(c) TFEU they may be objected to when they result in a discriminatory practice. The
following cases provide an illustration of the Commission’s and European Courts’ approach to
excessive prices:
26/75 General Motors v Commission