"Conditional Pricing and Monopolization: A Reflection on the State of Play"

Michigan Law Authors
Publish Date
Competition Law & Policy Debate
Publication Type
Journal Article

Conditional pricing practices -- including bundled discounting, loyalty rebating, and market share discounts -- are not new phenomena in the U.S. market. Their potentially exclusionary consequences were raised in antitrust cases decades ago. But unlike trying or exclusive dealing -- which have a rich history of case law and scholarly coverage -- conditional pricing practices did not emerge as salient to the antitrust community until a little over a decade ago. Two federal appellate decisions in the early 2000s -- Concord Boar on market share rebates and LePage's on bundled discounting -- sparked a period of intensive interest and activity on these topics in the antitrust agencies, courts, bench, and legal and economic academy. Because the U.S. Supreme Court has not yet weighed in (and may not do so in the near future given the small number of antitrust cases it hears), the issues are largely in the hands of the lower federal courts and antitrust agencies, where there is nothing approaching consensus on how to apply Section 2 of the Sherman Act to conditional pricing practices. In this essay, I propose to provide a high level reflection on the development of the conditional pricing issue over the last decade in the U.S., articulate the current state of play, and speculate about where things may head in coming years. I have been a partisan rather than detached observer in these engagements -- representing clients in litigation and writing a number of scholarly papers on the topic, generally in opposition to intrusive antitrust scrutiny of loyalty-enhancing pricing practices. For purposes of this essay, however, it is not my goal to make the case in favor of conditional pricing or antitrust restraint, but rather to provide a descriptive overview of the continuing course of this debate in the United States.

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