Loyalty-Discount Programs and the Antitrust Laws
Loyalty discounts are price reductions by a supplier in return for a customer’s commitment to purchase a certain percentage of its requirements from the supplier. Sellers also sometimes discount their prices if a customer purchases two or more of the seller’s products. These discounts generally pose little threat to competition and are often considered procompetitive. But certain discount programs could have an anticompetitive market effect by eliminating competitors, increasing prices, and reducing product quality, thus implicating antitrust concerns.
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