Retrospective Rebates 151. Conditional rebates are granted to customers to reward a certain (purchasing) behaviour of these customers in a particular period of time. The usual form is that the customer is rewarded if its purchases exceed a certain threshold during a defined reference period. It makes an important difference for the assessment whether the rebate is granted on all purchases during that period or only on incremental purchases above the threshold. It will also be important for the assessment in what terms the threshold is formulated, for instance as a percentage of total requirements of the buyer, as an individualised volume target or as a standardised volume target. Also other characteristics may make a certain difference in the assessment, such as whether there is only one threshold and rebate or whether a grid of thresholds and rebates is established.96
18.104.22.168 CONDITIONAL REBATES ON ALL PURCHASES
Retrospective Rebates 152. Conditional rebates that are granted on all purchases in the reference period once a certain threshold is exceeded can have a strong foreclosure effect.97 To induce such an effect it is necessary that the dominant supplier sets the threshold above the level that the buyer would purchase from the dominant company in the absence of any loyalty enhancing obligation or rebate. As explained in paragraph 143 above, the dominant position will in general ensure that most buyers will anyhow purchase most of their requirements from the dominant supplier, for instance because its brand is a ‘must stock item’ preferred by many final consumers or because the capacity constraints on the other suppliers are such that a good part of demand can only be provided by the dominant supplier. If the threshold is only set at the level that would anyhow be purchased by the buyer from the dominant company, the rebate will not have a loyalty enhancing
effect. If the threshold is set above the amount that would otherwise be purchased, the rebate may induce the buyer to purchase more than it would otherwise do, in particular by diverting purchases from other suppliers to the dominant company, in order to be able to benefit from the rebate on all its purchases and thus effectively lower the price for all its purchases.
If a company uses different conditional and/or unconditional rebate systems for the same product, the Commission will both assess their individual and their collective effects. Case 322/81 Michelin I, cited in footnote 26, paragraphs 70-73.