05 April 2007

American Modernization Commission Report Published

The AMC released its report on 3 April, making several recommendations, a few highlights of relevance are summarised below. The AMC is the latest in a regular review of antitrust laws, one of the more well-kown previos commissions is the 'Neal Report' that had suggested stronger action against oligopoly markets.

The AMC's report finds the state of antitrust law as essentially sound. Importantly the report emphasises that antitrust is not about making markets work better. It is not an industrial policy instrument. As I suggest in my book, EC Competition Law is still seen as forming an important part of the Community's industrial policy.

Highlights of the report include:

1) abolish the Robinson-Patman Act (this is a much disliked statute prohibiting price discrimination).

2) Bundled rebates should be handled differently, suggesting a three stage test: (a) after allocating all discounts and rebates attributable to the entire bundle of products to the competitive product, the defendant sold the competitive product below its incremental cost for the competitive product; (b) the defendant is likely to recoup these short-term losses; and (c) the bundled discount or rebate program has had or is likely to have an adverse effect on competition.
The gist of this is broadly to apply a predatory pricing type test to rebates. This is along similar lines to the EC Commission, although it is a much less aggressive standard than that advocated by the Commission or that applied in British Airways (see earlier post).

3) Facilitate private litigation by allowing law suits by direct and indirect purchasers. The idea is that both types of plaintiffs be able to sue, and that they damages (based on the higher prices charged by the defendant) are divided up between direct and indirect purchasers. This is interesting because there are similar debates in Europe. For example, in Germany the law provides that direct purchasers can sue but indirect purchasers cannot. Is this a matter for Community Law?

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