Loyalty Discounts and Anticompetitive Concerns


Summary

This practice note explains the antitrust risks associated with providing loyalty discounts to customers and provides practical ways to avoid civil liability for such conduct. Loyalty discounts can take a variety of forms, such as reduced prices, coupons, or rebates, but generally consist of variations on the following themes: (1) a discount that sets purchase thresholds of one product or product line, which may be based on volume, market share, or shelf space, that qualify the customer for the discount; and (2) a discount designed to increase the types of products purchased by a customer by setting thresholds across multiple product lines. This practice note will explain how courts and enforcement agencies assess the lawfulness of loyalty discounts in Section 2 claim cases, including where the discount involves below-cost pricing or exclusivity. This note also includes guidelines on best practices with respect to contractual terms and other written communication relating to loyalty ...