Complex Pricing Strategies: Discrimination, Predation, Loyalty Rebates, And Bundling

Paris, France
Hosted By: Cycle Droit & Economie de la concurrence

NERA Senior Consultant Dr. Fabien Curto Millet spoke on the antitrust assessment of complex pricing strategies in the context of abuse of dominance cases at a Droit & Economie de la Concurrence conference in Paris on 14 April 2010. The conference, which was organised by leading competition policy journal Revue Concurrences, also featured Professor Emmanuel Combe (Member of the Autorité de la Concurrence and Professor of Economics at the Université de Paris I) and Joseph Vogel, Senior Partner at Vogel & Vogel.

Dr. Curto Millet described the mechanics of predatory pricing strategies and the types of economic tests that may be used to distinguish these from normal competitive behavior. Having outlined the basic pattern followed by exclusionary strategies, he turned to the analysis of loyalty discounts and rebates, noting their consideration in European Commission and Court cases such as Hoffmann-La Roche, Michelin I and II, BA/Virgin, and Intel. He focused on retroactive rebates, and set out the circumstances in which these could result in anticompetitive effects and competition concerns under Art. 102 TFEU.

Dr. Curto Millet's presentation then provided an economic perspective on the assessment of bundling and tying practices, noting the European cases of Microsoft I and II, as well as Van den Bergh. He discussed the rationale for such business practices and the potential benefits and efficiencies they could deliver, including through their role in achieving price discrimination. He further discussed the circumstances in which such conduct could lead to exclusionary effects, competitive harm, and a reduction in consumer welfare.

Finally, Dr. Curto Millet also underscored the specific difficulties raised by the quantification of damages in cases of exclusionary unilateral conduct, when compared for example to such an evaluation in price fixing investigations and cartel cases. He notably emphasised the complexity of specifying the relevant counterfactual in such situations, and the need to account for the dynamic aspects of the practices involved. Such considerations will need to be addressed in the development of private damages actions in Europe.

An article based on Dr Curto Millet's presentation at this conference was subsequently published in the Revue Concurrences.