|FOR IMMEDIATE RELEASE
TUESDAY, MAY 6, 2014
TTY (866) 544-5309
DEPARTMENT OF JUSTICE AND FEDERAL TRADE COMMISSION TO HOLD
Topics will Include the Law and Economics of Loyalty and Bundled Pricing
The Department of Justice and the Federal Trade Commission (FTC) will hold a joint public workshop on June 23, 2014, to explore the economic and legal analysis of conditional pricing practices among firms in a supply chain. The workshop will focus on conditional pricing arrangements – practices in which prices are explicitly or effectively contingent on commitments to purchase or sell a specified share or volume of a single product or a mix of multiple products – such as loyalty or bundled pricing.
A principal goal of the workshop will be to advance the economic understanding of the potential harms and benefits of conditional pricing practices and to reexamine their treatment under the antitrust laws.
Conditional pricing practices, similar to other distribution strategies, may have anticompetitive effects and efficiency benefits. For example, if a loyalty or share discount induces buyers to make most or all of their purchases from the seller, under some circumstances it might deprive the seller’s rivals of sufficient access to efficient distribution or production and facilitate the seller’s exercise of market power. Similarly, bundled pricing can deny rivals that do not produce all of the products in the bundle efficiencies of scale or scope. Supporters of such arrangements contend, however, that as long as these practices involve prices that are above some measure of cost, they are likely to reflect beneficial price competition, and that restraining their use will inhibit robust competition.
The legal treatment of conditional pricing practices has traditionally fallen into two categories. The first focuses on pricing and applies various forms of a price-cost test. The second examines whether a particular pricing practice reduces competition by raising the costs of rival firms or otherwise impeding their ability or incentives to expand or achieve efficiencies. These effects on competition could be comparable to those resulting from other distribution practices, such as exclusive dealing or tying.
Economic Learning. Workshop participants will examine both theoretical and empirical economic learning regarding these arrangements and consider many questions, including:
Law and Policy Issues. Participants also will consider how to integrate the economic learning with the relevant legal standards. To that end, the workshop will explore the current legal standards in the United States and abroad and will consider a number of questions, including:
The Department of Justice and the FTC are interested in receiving comments on conditional pricing practices and will accept written submissions from now through Aug. 22, 2014, 60 days after the event. Interested parties may submit public comments to https://ftcpublic.commentworks.com/ftc/conditionalpricingworkshop. Submitted comments will be made publicly available on the Department of Justice and FTC websites.
The all-day workshop is free and open to the public. Individuals are encouraged, but not required, to register in advance for the workshop by sending an email to CPPworkshop@ftc.gov. Please include “RSVP” in the subject line. Seating will be on a first-come, first-serve basis.
Reasonable accommodations for people with disabilities are available upon request. Requests should be submitted by e-mail to firstname.lastname@example.org or by calling Lara Kittelson at 202-326-3388. Requests should be made in advance. Please include a detailed description of the accommodation needed and provide contact information.
The workshop will take place at the FTC’s new satellite conference center, Constitution Center, 400 Seventh Street, S.W., Washington, D.C. 20024. A workshop agenda and list of speakers will be published in advance of the workshop.
# # #