1. Loyalty Rebates: Exclusive Dealing, Predatory Pricing, or Both?
Assessing the Competitive Effects of Loyalty Rebates – Should Rebates be Viewed as Exclusive Dealing, Predatory Pricing, or Both?
Conference: importance and country experiences on SOE reforms
SOEs and Private Firms: Leveling the Playing Field Across Markets”
March 27 from 9:00-10:30
the OECD experience and good practices on the application of the competitive neutrality principles.
Your presentation should take minutes
to bring in the OECD experience and good practices on the competitive neutrality principles and why they are important to ensure a level playing field across markets
This session will discuss the rationale for State participation in the economy;
SOEs and competition policy - what matters in practice.
It will also Introduce market discipline through competitive neutrality in markets with SOEs and private sector participation.
Chris Pike
Competition Expert, OECD
ICN Unilateral Conduct Workshop
Stellenbosch, South Africa
November 2018

2. Should Rebates be Viewed as Exclusive Dealing, Predatory Pricing, or Both?
OECD Roundtable on Fidelity Rebates (2016)
Theories of harm on loyalty rebates
Predatory Pricing
Profit sacrifice followed by recoupment
Leveraging non-contestable sales
De Facto Exclusive Dealing
Consumer foreclosure: reduce rivals’ revenue e.g. divide and conquer & economies of scale
Input foreclosure: raise rivals’ costs e.g. agree an exclusive deal on key materials or IP
Taxing rivals prices – vertical coordination
Softening price competition theories

3. Testing the theories of harm
Predation:
Price-cost test & recoupment test
or ‘discount attribution test’
De facto exclusive dealing:
Is it de facto exclusive dealing?
Does exclusive dealing raise rival’s costs?
Do increased costs raise prices?
Why could rivals not match it?
Taxing rivals prices:
Do buyers face a significant tax on buying from a rival?
Are prices high?
How do distributors react when one rejects the rebate?

4. So, loyalty rebates can be both…
Work from the complaint and consider the facts of the case
Don’t rely on price cost tests
Better to prioritize cases where high prices are insulated from competition
Hence do not focus on predatory cases
And don’t forget potential efficiencies!

5. Thank you for your attention!
Thank you for your attention!
Chris Pike