Tuesday, June 17, 2008
Posted by D. Daniel Sokol
Renato Nazzini (University of Southampton School of Law) writes on Anticompetitive Rebates in EC Competition Law: A Way Forward?
ABSTRACT: One area of EC competition law that has been particularly controversial in recent years is the application of Article 82 of the EC Treaty to allegedly anticompetitive rebates. The case law of the Community Courts concerns single-product rebates, but even more complex issues arise if the rebate is given on condition that the customer buys certain amounts of a number of products (two or more) offered by the dominant undertaking. These rebates may be analyzed as a mixed bundle but also as a rebate whose foreclosure effect may be functionally equivalent to that of single-product rebates. This is because, similar to single-product rebates, multi-product rebates may have the effect of denying single-product competitors the opportunity to reach the minimum efficient scale in their respective markets.
This article is organized as follows: Section I discusses the EC case law and the risks of false positive errors and over-deterrence it gives rise to; Section II analyzes the approach suggested in DG Competition discussion paper on the application of Article 82 of the Treaty to exclusionary abuses, published in December 2005; Section III proposes a principle-based analytical framework as a possible way forward for the assessment of anticompetitive rebates. Under the proposed analytical framework, dominant undertakings benefit from meaningful safe harbors and anticompetitive rebates are assessed based on a medium- to long-term consumer harm test; and Section IV draws a general conclusion.