A Proposed Test for Separating Pro-competitive Conditional Rebates from Anti-competitive Ones

While the granting of rebates is a common commercial practice largely used by dominant and non-dominant fi rms, the assessment of rebates is one of the most complex and unsettled areas of competition law. In the EU, the decisional practice of the European Commission and the case-law of the Community courts have been harshly criticized as unnecessarily strict, following a form-based approach that sits uneasily with modern economic theory. In response, DG COMP published in December 2005 a Discussion Paper that promotes an effects-based approach to the assessment of rebates. This approach was recently confi rmed in the Guidance Paper of the Commission on Article 82 EC published by in December 2008. US courts have generally shown greater deference to conditional rebates adopted by dominant fi rms, but the case-law remains unsettled, notably in the area of bundled rebates. Against this background, this paper proposes an analytical framework, based on a three-step test, designed to separate pro-competitive rebates from anticompetitive ones. A particular emphasis will be placed on the treatment of single product "retroactive" rebates, which create complex issues.