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Competition Law Insight: Exploring Competitive Impact of Loyalty Discounts and Rebates

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WASHINGTON, D.C., October 21, 2011 -- In an article in the October 18, 2011 issue of Competition Law Insight, Baker Botts partner Charles Webb writes about how the application of competition and antitrust laws to single product loyalty discounts by dominant firms has been an area of some uncertainty. On the one hand, he notes, discounts are the hallmark of competition, and consumers benefit from lower prices.

On the other hand, providing discounts or rebates on purchases of a single product can lead to increased loyalty to a single supplier, and concerns have been raised that, under certain circumstances, a dominant firm’s use of loyalty discounts or rebates can have anticompetitive effects analogous to de facto exclusive purchasing obligations. Determining whether such conduct risks an adverse impact on competition – as opposed to being competition on the merits – is no easy task.

Recently, the unilateral conduct working group (UCWG) of the International Competition Network (ICN) has explored this area, in an attempt to bring greater clarity and foster further convergence.

The complete Competition Law Insight article is available here.

Charles Webb’s bio is available here.



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