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Case and Comment
THE recent judgment of the Court of Justice in Intel v Commission (Case C-413/14 P, EU:C:2017:632) deserves a cautious welcome for signalling a move to a more economics-based approach to the assessment of loyalty rebates under Article 102 TFEU, and for modulating the rigid legal presumptions that have characterised nearly four decades of case law. Yet it also represents a missed opportunity to provide a comprehensive analytical framework for one of the more unsatisfactory areas of EU competition law.
Not all rebates or discounts offered by a dominant undertaking will be regarded as an abuse of dominance under Article 102 TFEU; discounting is a fact of normal commercial life and some discounts are rivalry-enhancing, but it has not always been clear where the line should be drawn. On the one hand, Michelin II (Case T-203/01, EU:T:2003:250) confirmed explicitly (at [58]) what Hoffmann-La Roche (Case 85/76, EU:C:1979:36) had left implicit (at [90]): that quantity rebates or discounts, linked solely to volumes purchased from the dominant undertaking, are generally considered not to give rise to foreclosure effects and are presumptively lawful. They are deemed to reflect efficiency gains and economies of scale: if the dominant firm is able to reduce its costs by supplying larger quantities it should be entitled to pass on those cost savings to customers without falling foul of competition law. On the other hand, loyalty-inducing rebates (also known as "fidelity" rebates) are more problematic and have consistently been condemned ever since Hoffmann-La Roche. There, the Court held (at [89]) that a dominant undertaking will be guilty of an abuse if it offers, whether pursuant to an agreement with a customer or unilaterally, "discounts conditional on the customer's obtaining all or most of its requirements" from the dominant firm, irrespective of the quantity of the purchases involved, and even if the discount is offered at the request of the customer. Loyalty rebates were considered an unjustifiable restriction on the customer's choice of supplier, foreclosing other suppliers from access to the market, and resulting in discrimination in so far as some customers would obtain a better price than others, in return for exclusivity (at [90], echoing similar comments in Suiker Unie (Joined Cases 40/73 etc., EU:C:1975:174) at [518], [523]). This...