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EUROPEAN COMMISSION DG Competition - page 78 / 113

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exclusionary effects the Commission will apply to these unconditional rebates and the resulting lower prices for certain customers the guidance as developed in the section on predatory pricing.In its assessment the Commission will take into account that the exclusionary effect may not only inhibit entry and competition for these customers that may more easily switch, but may also delay entry and competition that would benefit the other customers of the dominant company. In such a case recoupment may take place not just after but also during the time that the predation takes place (see section 6, paragraph 121). Here too the selectivity will be taken as an important part of the evidence to show that there is intent to predate and the Commission will apply the same rebuttable presumption of predation in case the price for the additional units is below average total cost.

7.2.5 POSSIBLE DEFENCES: OBJECTIVE JUSTIFICATIONS AND EFFICIENCIES

Four Conditions 172. In case a single branding obligation or a rebate system is likely to have an appreciable foreclosure effect, the dominant company may argue that it can justify its obligation or rebate system because of efficiency considerations. In order for the efficiency defence to apply to the obligation or rebate system, it must be shown that the four conditions described in section 5.3.3.,

paragraph 84, are fulfilled

.

  • 1)

    Indispensable to obtain cost savings passed on to consumers

  • 173.

    A first example could be that the rebate system is indispensable to obtain cost

advantages and pass them on to the customers. These cost advantages may be related to the size of the individual transaction or delivery and to the size of total purchases by a customer in a particular period. Such cost savings need to be substantiated. General remarks about transaction cost savings or general claims of better production planning are not enough.110 Such cost savings may require a rebate system using a (grid of) standardised volume target(s) but are unlikely to require and are unlikely to be efficiently achieved with a rebate system where the threshold is set in terms of a percentage of total requirements of the buyer or an individualised volume target.

110 Case 322/81 Michelin I, cited in footnote 26, paragraph 85; Case C-163/99 Portugal v Commission, cited in footnote 57, paragraphs 55-56; Case T-203/01 Michelin II, cited in footnote 59, paragraphs 107-108.

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