Rebates: Formalism, Effects and the Real World

By Lia Vitzilaiou

Rebates by dominant undertakings are a controversial area in competition law. While they can be part of genuine price competition and lead to lower prices, they can be also used by dominant firms as a means to exclude competitors and effectively harm customers. Under one approach, a rebate must be regarded as abusive if it is generally “loyalty enhancing” regardless of its concrete effects on the market. This approach derives from the traditional case law of European Union courts and is considered to be the prevailing view of jurisprudence to date. Under another approach, the practical effects of rebates should be assessed through economic tests and the rebates’ impact on competition should be quantified. This article addresses these approaches and related case law.

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