Loyalty Discounts May Abuse a Dominant Position - No Change

In an important appeal judgment earlier today, the General Court reaffirmed the established principle that a company enjoying a dominant market position is likely to be abusing that position where it applies a loyalty discount system. A "loyalty" or "fidelity" discount occurs where a financial advantage is granted in return for a purchaser sourcing all or most of its requirements for the relevant products from the dominant supplier. The General Court (which, before December 2009, was known as "the Court of First Instance") also confirmed that, even in the absence of a financial advantage, a purchase commitment meant to cover most or all of the purchaser's expected requirements for the relevant products is likely to be abusive.

What were the abusive practices considered by the General Court?

The judgment concerns the appeal to the General Court by Tomra Systems ASA and various other companies within the Tomra group ("Tomra") of a 29 March 2006 Decision by the European Commission (the "Commission") fining Tomra €24m. The Commission found that Tomra had abused a dominant position on various national markets for reverse vending...