Efficiency enhancing, anticompetitive or both
138. A supplier may use single branding obligations and rebate systems for efficiency enhancing reasons and for anti-competitive reasons and they may have efficiency enhancing effects and anti-competitive effects. An efficiency may for instance be obtained in case the supplier, in order to supply a particular customer, makes a relationship specific investment. In order to be able to earn back the investment, the supplier may require that the buyer purchases a certain minimum amount of the product, which may be ensured by a single branding obligation or a rebate system. The possible positive effects of single branding obligations and rebate systems are dealt with mainly in the section on possible defences. Before that the possible negative effects will be dealt with. Both the positive and negative effects depend on the form of the single branding obligation and/or rebate system, on the extent such obligations or rebate systems are used by the supplier
and on the circumstances on the market where they are applied.
Main possible negative effects are horizontal foreclosure of competitors 139. The main possible negative effect of single branding obligations and rebate systems is foreclosure of the market to competing suppliers and potential suppliers, which maintains or strengthens the dominant position by hindering the maintenance or growth of residual or potential competition (horizontal foreclosure). In case such obligations or systems are used by several, collectively dominant, suppliers, this may have a cumulative foreclosure effect and may
in addition further facilitate collusion. In case the buyers are retailers selling to final consumers the foreclosure may also lead to a loss of in-store inter-brand competition.
Price discrimination between buyers considered only if forecloses Domco’s competitors 140. Another possible negative effect of rebate systems is price discrimination between the different buyers. In a number of cases the Commission and European Courts have stressed not only the intent and/or effect to foreclose, but also the discrimination which resulted from the
applied rebate system, in particular discrimination between competitors on a downstream market.86 This section deals with the use of rebate systems to foreclose competing suppliers and
See Case – 85/76 Hoffmann-La Roche cited in footnote 5, paragraph 106; Case T-228/97 Irish Sugar, cited in footnote 38, in particular paragraphs 140-141; Case T-203/01 Michelin II cited in footnote 59, paragraph 158;