ANTITRUST BY ANALOGY: DEVELOPING RULES FOR LOYALTY REBATES AND BUNDLED DISCOUNTS

Economics has come to dominate antitrust jurisprudence. The thought of developing an antitrust liability rule without a well-considered underlying economic theory is anathema. But there is the question of what a court should do when there is no consensus on the underlying economic theory. That is the situation for the antitrust treatment of loyalty rebates and bundled discounts. The antitrust case law offers little guidance. The answer is simple -- analogy. The courts have sought to craft antitrust rules for rebates through analogy to existing case law regarding exclusive dealing, tying, and predatory pricing. However, while analogical reasoning is a uniquely powerful tool, superficial analogies lead to incorrect conclusions. The courts' sloppy use of a wholly appropriate tool has brought significant and inappropriate baggage into the analysis of rebates. More thorough analysis of the analogies leads to the conclusion that a multifactored rule of reason is the better approach.