Loyalty and Fidelity Discounts and Rebates

As with other policies offering lower prices to at least some buyers, loyalty and fidelity discounts are generally pro-competitive and beneficial to consumers even though they may harm certain competitors. Potential problems exist, however, when such discounts are employed in ways that reduce price transparency, exclude or restrict a significant number of actual or potential competitors, or raise the probability of anticompetitive co-ordination. The sometimes complex pro-and anti-competitive effects of loyalty and fidelity discounts are explored in the documentation on the topic. While these documents reveal some interesting policy differences among various members of the Competition Committee, they also point to general agreement that loyal ty and fidelity discounts are more likely to raise competition concerns when practised by firms enjoying substantial market power. This document comprises proceedings in the original languages of a Roundtable on Loyalty and Fidelity Discounts and Rebates which was held by the Competition Committee in June 2002.