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Price Discrimination

Price Discrimination

Chapter:
(p.63) 4 Price Discrimination
Source:
The Atlantic Divide in Antitrust
Author(s):
Daniel J. GiffordRobert T. Kudrle
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226176246.003.0004

Price discrimination is an important instrument of competition: firms in industries that might otherwise have excess profits based on entry barriers and recognized mutual dependence can be destabilized by the ability of participants to nibble at each other’s markets through selective price competition. Nevertheless, firms may sometimes employ targeted discrimination to hinder the competitive progress of rivals who would benefit if they could not be singled out for attack through such devices as fidelity rebates. The U.S. should repeal the Robinson-Patman Act – and not merely treat primary and secondary line price discrimination effects differently –and the EU should abandon its comprehensive prejudice against price discrimination reflected in the language and application of Article 102 TFEU. Both jurisdictions should critically explore claims that a seller’s discriminatory prices, which may adversely affect particular rivals of that seller, are threatening competition in the market.

Keywords:   price discrimination, Robinson-Patman Act, Article 102 TFEU, primary line effects, secondary line effects, fidelity rebates

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