Devising Pro-Competitive Rebates

Apr 18, 2013

CPI Europe Column edited by Anna Tzanaki (Competition Policy International) presents:

Devising Pro-Competitive Rebates by Hans Zenger (Charles River Associates)

(Click here for a PDF version of the article.)

Introduction by Europe Column editor Anna Tzanaki

In this month’s Europe Column, we are delighted to host Hans Zenger, winner of the 2013 Antitrust Award in the category of economics (for academic articles). This shorter paper revisits the thorny issue of loyalty rebates and the potential of foreclosure under EU competition law. It analyses the transition from a per se prohibition of loyalty rebates to a more sophisticated two-stage antitrust analysis under an effects-based approach. However, despite the shifting policy guidance and EU case law, the author recognizes the grounds for legal and economic uncertainty in assessing rebate schemes, hence the dominant firms’ reluctance to go beyond the traditionally set path. Most valuably, this paper provides some practical advice under simple rules of thumb on how dominant players can effectively apply pro-competitive rebates and compete rigorously with rivals in the market while avoiding regulatory risks.

We hope you delve into the discussion and enjoy reading!

The traditional per se prohibition of loyalty rebates under Article 102 TFEU had been a source of concern to almost anyone but the most orthodox proponents of orchestrated markets. Faced with a restrictive and form-based case law, firms that had gain