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Which test for bundled discounts

Bundled discounts are a form of price cutting which are presumptively beneficial to consumers. However, bundle offers from a dominant firm might exploit market power to foreclose competitors, thus harming consumers. The European Commission and the DoJ set out a framework to analyze the potential exclusionary effects of bundled discounts by dominant firms. Focusing on the implementation of the price-cost test, this note discusses two issues that neither the DoJ nor the Commission have addressed so far. Namely, the evaluation of the nature of competition in the relevant markets and the rule to allocate the discount across the products when bundle-to-bundle competition is not possible.


Date: November 2011
Author(s): Lear
Tag(s): Lear Competition Notes , Abuse of Dominance, Competition Economics, Regulation