Anti-Monopoly Regulation On Loyalty Rebates

Loyalty rebates are discounts or rebates given based on particular purchase behaviour which are more frequently used as a means of price competition.On the one hand,it can effectively reduce the price of products and enhance the welfare of consumers;on the other hand,it may cause actual or potential threats to the market competition because of its loyalty-inducing effect and the ability to exclude competition.Regulation of such behavior should consider its dual character and analyze its anti-competitive effects in individual case in the purpose of protecting competition and combining the features of such behaviour based on the general elements of the abuse of market dominance.Regulation of EU on royalty rebates has undergone a transition from the "rule of per se illegality" to the "rule of reason",after which the EU began to adopt the "Equally-Efficient Competitor Test" and "Price-Cost Test".By contrast,US adopts a more relaxed stance who mainly regulates such behaviours in the analogy of predatory pricing,tying,and exclusive dealing.However,the practices of EU and US may increase the uncertainty of anti-monopoly law.As China’s anti-monopoly law does not explicitly regulate such behaviors,normative system for such behaviors should be gradually established starting from the low-level norms,adopting the "rule of reason" and referring to relevant practice of EU to determine the anti-competitive effect of loyalty rebates.On the law enforcement level,China’s anti-monopoly law enforcement agencies should introduce economic talents as well as enhance the uniformity and certainty of its law enforcement.In addition,China should also improve the anti-monopoly private litigation system to build a last line of defense.