The rebates, which consist in granting a lump sum discount to the ...

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Because both exclusionary rebate and predatory pricing cases by dominant companies wouldoperate with elements of below cost pricing.In order to find out how this can be tested, and more importantly, whether the offers that fail such atest can be deemed to be anticompetitive, it would be essential to understand how the dominantcompany’s rebates can harm competitors. As the DG Competition Discussion Paper puts it, the coreof the problem of rebates by dominant companies lies in the fact that: “...the buyers, also withoutloyalty enhancing measures, will buy a large part or even most of their purchases from thedominant supplier. The dominant position usually implies that for a good part of the demand on themarket there are no proper substitutes to the dominant supplier’s product, because for instance itsbrand is a “must stock item” preferred by many final customers or because the capacity constraintson the other suppliers are such that a good part of demand can only be provided for by thesupplier” 15 ..Under these circumstances, other firms cannot effectively compete with the dominant undertakingfor a substantial part of the market.By contrast, if we are in a market where the product offered is homogeneous and there are nocapacity constraints for competitors, then the latter would be capable of competing equally with thedominant undertaking for all customers and for each individual customer’s entire demand. In suchcases, the rebate scheme would not be capable of foreclosing the market to the competitors if theeffective average price implied by the rebate is not found to be predatory by passing a cost-basedpredation test.However, in the majority of the markets where rebates by dominant companies are appliedcompetitors do compete for the contestable part of the customers’ demand.From an economic point of view, the most important antitrust concerns have arisen with regards toone particular kind called loyalty or fidelity rebates 16 . These are distinct from the simple rebatingpractices applied to all customers and to all quantities acquired by them or from selective price cuts15 DG Competition Discussion Paper on art.82 (2005)16 These rebate schemes are analysed by DG Competition Discussion Paper on art.82 under the category of“Conditional Rebates” which are the rebates granted to customers to reward a certain (purchasing) behaviour of thesecustomers. Moreover, the Discussion Paper seems to analyse selective price cuts under the category of “unconditionalrebates” that are granted to certain customers and not to others, and are granted for every purchase of these particularcustomers, independently of their purchasing behavior.6Faella (2008) gives a complete picture of this issue.18
which apply only to some type of customers but to all quantities acquired by these customers.Loyalty rebate practices have potential anticompetitive effects similar not only to predatory pricingpractices in foreclosing the market but they potentially include additional anticompetitive effectssimilar to exclusive dealing arrangements by making the application of the rebates conditional oncustomers exceeding certain sales targets within a certain reference period.As a matter of fact, both the greatest need to find a “safe harbour” rule to distinguish between “bad”and “good” rebates and the biggest analytical difficulties in elaborating such a test that would givethe authorities guidance in assessing the anti competitiveness of rebate scheme seems to arise withregards to loyalty rebate practices.The aim of the test for loyalty rebates would be to assess whether in presence of the rebate systemthe “as efficient” competitors are foreclosed from the market in supplying the contestable part ofcustomers’ demand 17 . For assessing this, three elements must be identified. These are (a) theeffective price - which must be found by analysing in particular the loyalty enhancing effect; (b) therelevant cost measure to compare with the effective price; and (c) the relevant time period forassessing the rebate scheme. With regards to the first element one should understand the amount ofproducts that customers would acquire from the dominant company in absence of the rebate schemebecause the dominant company would use this amount as leverage to decrease the prices of theamount contestable by smaller competitors. It is also essential to know how the specific thresholdworks, whether it is structured as a standard quantity or as percentage quantity of the customers’needs, and very importantly whether the rebate is granted to all purchased quantity or only to theincremental quantities above the threshold. Without understanding how many units the rebateshould cover it cannot be possible to understand the effective price.For instance, a threshold posed above the normal quantity that would be acquired by customersfrom the dominant firm independently of the rebate, could warn about the possible loyaltyenhancing effect that the rebate implies. Moreover, the retroactivity of the rebate on all purchasesonce the threshold is met by the customer could indicate that the rebate will create a lock-in effectfor consumers. In fact, the intensity of the loyalty enhancing effect would depend on the percentageof rebate and on where the threshold is posed.19
Page 1 and 2: LUISS GUIDO CARLIDOTTORATO DI RICER
Page 5 and 6: a form-based approach 4 . In partic
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Page 10 and 11: In the following section are analyz
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Page 23 and 24: References:DG Competition, DG Compe
Page 25 and 26: Secondo quanto stabilito dalla giur
Page 27 and 28: L’autonomia di fattispecie abusiv
Page 29 and 30: Difatti DT era soggetta a specifici
Page 31 and 32: L’applicazione dei criteri sopra
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Page 41 and 42: BIBLIOGRAFIACase C-52/09, Konkurren
Page 44 and 45: REGULATORY IMPACT ASSESSMENT INTELE
Page 46 and 47: IntroductionRegulatory Impact Asses
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With the adoption of New Regulatory
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The Commission evaluates the impact
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The document of Commission gives ve
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following are summarized the main p
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The electronic communications secto
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In order to reach this objective th
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2) this would have a positive impac
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Economicoperators' costsand benefit
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costs and benefits related to the e
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3. Third Case Study - The Commissio
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According to the ERG Common Positio
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architecture implemented by an SMP
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same time Ofcom believes that this
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In order to understand how the RIA
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What is possible learned from the a
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- European Commission, Draft Recomm
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