The Competitive Effects Research Of The Dominant Enterprise Single Product Loyalty Discount

Loyalty discount is the discount that the enterprise offers in terms of the customer’s volume of purchase.Specifically,loyalty discount means that the seller will give the buyer a certain amount of discount or return if customer’s purchasing quantity reaches a certain condition that the seller provides.With the increasing pressure of market competition,enterprises often take some different ways of competition to obtain higher market share and have a certain market power,so that they can increase the number of buyers of products.Loyalty discount is one of the common price competition behaviors.Loyalty discount behavior is controversial because it is likely to be a tool for dominant enterprises to abuse its dominant market position.Broadly speaking,loyalty discounts include single product loyalty discount and multi-product loyalty discount,This paper mainly introduces the single product loyalty discounts,single product discount means that the sellers buy a particular product and when the volume of purchase reaches the discount threshold,the seller will provide them discount or rebates.The only one case about loyalty discounts in China at present is the case of Tetra Pak,during the period of 2009-2013,the implementation of the Tetra Pak’s loyalty discounts abused market dominant position.China’s industrial and commercial administration fined about 660 million RMB.China’s industrial and commercial administration found that loyalty discount behavior of Tetra Pak has the effect of inducing and anti-competitive effect,obvious effect of package materials related to the competition of the market,and these behaviors broke China’s "anti-monopoly law" ’s provisions of the other acts of abuse of market dominance ",so that China’s industrial and commercial administration has carried on the strict punishment.However,compared to western countries,there are many cases like this.In Europe,there are Michelin case(2001),Tao Lang(2006),Intel(2009)and other typical cases.The relative mature antitrust policy in Europe is worthy of our reference.The study of the EU’s loyalty discount behavior is of great significance for the improvement of China’s antitrust system.In this paper,the concept of loyalty discount,competition theory and related competition policy are introduced in detail.First of all,this paper makes an overview of the loyalty discount behavior: first,it introduces the concept and classification of the loyalty discount behavior;second,it discusses the nature of the loyalty discount behavior,including price discrimination,predatory pricing,exclusive dealing and binding dealing.Secondly,from the view of economics,the competition effect of loyalty discount is analyzed,which mainly include the theory of anti-competitive effect and promotingcompetition effect.The theory of anti-competitive effect is mainly based on the theory of the predatory pricing theory and the theory of binding leverage.The theory of promoting competition effect is mainly based on the theory of inducing the downstream to sell effort,and eliminating double-marginalization.This article establishes relevant models to discuss these theories.In addition,this paper introduces the two important cases-Michelin case and Intel case,these two cases are typical representatives of the European Union’s loyalty discounts behavior.The two cases indicate that EU competition committee has different regulation principle about loyalty discounts behavior in different stages,including the principle of form-based and effect-based,the latter is described in detail.In the end,the paper mainly introduces that China should draw lessons from European Union’s competition policy of the loyalty discount behavior.The Tetra Pak case under China’s investigation is a typical application of the principal of EU anti-trust regulation.This paper mainly uses research methods:the method of comparative analysis,case analysis and historical method.This paper select two typical EU case:the Michelin case and the Intel case.We can find EU’s specific anti-trust regulation measures for loyalty discount behavior through the investigation and comparative analysis of the EU’s treatment in two cases.This paper selects a more detailed behavior of anti-monopoly to conduct in-depth study,to avoid the vague choice of topics.There are few researches on loyalty discount in China,and there is some innovation in the topic selection.In addition,the domestic research mainly focuses on the angle of law,but not from the economic point of view.This paper attempts to analyze the loyalty discount behavior by using the theoretical model to analyze the two effects of "pro-competition" and "anti-competition" of single-product loyalty discounts.