What Can We Learn About the Application of the as Efficient Competitor Test in Fidelity Rebate Cases from the Recent US Case Law?

Abstract

It is accepted that the treatment of fidelity rebates is one of the most controversial topics in European Union competition law. It remains an outstanding issue despite the clear position of the Court of Justice in both the Intel and Post Danmark II judgments to depart from the strict form-based approach and to endorse an approach based on an evaluation of the possible anticompetitive effects of fidelity rebates. In particular, it remains unclear whether a price-cost test should be deployed. The conditions when a price-cost test should be applied to fidelity rebates as opposed to alternative approaches is a central issue in recent US case law of fidelity rebates and associated scholarly debate. This article examines the academic debate in US and compares the treatment of fidelity rebates on both sides of the Atlantic in an attempt to clarify under which circumstances a price-cost test should be used as a tool to determine anticompetitive effects of fidelity rebates and how this clarification can be translated into concrete lessons for European caselaw. It reveals that the economic theory of raising rival’s cost explains that the assessment of a strategy to exclude an as efficient competitor does not require a price-cost test.