European Union: Rebate Schemes And Discount Practices By Dominant Companies Under EU Competition Law: "Tomra" Appeal Decision

Last Updated: 15 June 2012
Article by Dechert’s Antitrust/Competition Group

Key Points

  • The ECJ's Tomra decision confirms that the use of individualised and retroactive rebates by a dominant firm is a per se abuse, and it is not necessary to prove anti-competitive effects or intent.
  • The Tomra decision is at odds with the European Commission's 2009 Guidelines on the abuse of a dominant position, which advocate an effects-based approach to determine whether the proposed rebate had the actual effect of foreclosing competitors.
  • Until the legal position is clarified by an EU court decision reviewing a Commission action applying the 2009 Guidelines, dominant companies should avoid using individualised and retroactive rebates, and should also undertake a review of any rebate scheme that was adopted in reliance on the effects-based approach described in the 2009 Guidelines.


The European Court of Justice (ECJ) recently handed down a significant decision holding that the Tomra Group (Tomra) had abused its dominant position through the use of exclusionary strategies in the European Economic Area (EEA). The judgment follows the General Court and ECJ's traditional formalistic, or "per se," approach, which generally treats rebate schemes implemented by dominant entities as anti-competitive. The ECJ's decision is in tension with the effects-based approach to abuses of dominance championed by the European Commission's 2009 Guidelines.


Dominance has been defined in the EU as a position of economic strength that enables a firm to prevent effective competition in a relevant market through unilateral behavior (i.e., behavior that is to an appreciable extent independent of the firm's competitors, of its customers, and ultimately of consumers.)1

Market shares provide a useful first indication for the European Commission of the market structure and of the relative importance of the various competitors active in the market. The Commission's experience suggests that a firm is not likely to have dominance if the firm's market share is below 40% in the relevant market. However, there may be specific cases below that threshold where competitors are not in a position effectively to constrain the conduct of a dominant firm (e.g., because of serious capacity limitations).


The EU Per Se Position

The traditional approach represented by the ECJ's Tomra decision is to condemn rebate schemes employed by a dominant company as an abuse of dominance under Article 102 of the Treaty for the Functioning of the European Union (TFEU). Under this per se approach, a rebate program implemented by a dominant firm will be condemned if the rebates are given in exchange for customer loyalty and not on the basis of genuine cost savings and efficiencies, particularly where the rebates are tailored to individual customers or constitute 'all purchase' rebates. It is not necessary to prove an anti-competitive effect under this approach; a rebate scheme with these characteristics is by its object deemed to be an abuse, because the following is presumed:

  • Where a dominant entity uses information about its main customers to set rebate targets in such a way as to compel customers to make most of their purchases from the dominant entity, the firm thereby excludes other competitors from the relevant market (this situation is termed an "individualised" rebate); or
  • By applying the discount not only to purchases over a certain threshold, but to a customer's entire order, the dominant firm thereby penalises customers who do not purchase all of their requirements from the dominant entity (such rebates are termed "retroactive").

Under the per se approach, such individualised and retroactive rebate schemes are viewed as preventing customers from making purchases from alternative suppliers, as doing so would in effect penalise the customers through the denial of the discount and the imposition of associated switching costs. In the per se view, these rebate schemes are therefore deemed to be a barrier to entry that prevents other competitors from entering into or expanding in the market.

Tension Between the Per Se Position and the Effects-Based Approach

In 2009, the European Commission issued Guidelines detailing its approach to Article 102 investigations going forward. These Guidelines distanced the Commission from the traditional per se approach to rebates.

In the Guidelines, the Commission confirmed that rebate schemes are not an uncommon practice. A company may use rebates to incentivize customers to purchase not only those "must have" items that the customer will purchase from the company regardless of discounts, but also those "contestable" items that the customer might otherwise purchase from alternative suppliers. At the same time, however, the Guidelines recognize that where such rebates are instituted by a dominant firm, the result may be anti-competitive foreclosure of a necessary part of the market to competitors.

Applying its Guidelines, the Commission will look at the likelihood that the rebate will hinder entry or expansion by competitors that are equally or more efficient than the dominant entity.

As well as looking at the terms of the rebate, the Commission will attempt to calculate the price a competitor would have to offer in order for a customer to switch. This switching price will be calculated as the dominant entity's price less any rebates given over a relevant sales range and period. As long as this calculated price remains above the "long-run average incremental cost" of the dominant supplier (i.e., the dominant supplier is not operating at a loss), a rebate would generally not be seen as capable of foreclosing the market, as an equally efficient competitor should be able to compete on that basis. Where, however, the calculated price is below the "average avoidable cost" of the dominant supplier (i.e., the costs that could have been avoided if the company did not produce extra units), the rebate will generally be seen as foreclosing the market. Where the price lies between these two cost measures, other factors, such as alternative strategies available to competitors, will be considered.

The Tomra Judgment: Is the Tension Resolved?

Tomra produces reverse vending machines (RVMs), which collect empty beverage containers. A competitor, Prokent, complained to the Commission that Tomra had abused its dominant position, under Article 102 TFEU, to prevent new competitors from entering the market and to drive existing competitors out of the market.

In a decision issued three years before its 2009 Guidelines, the Commission held that Tomra had indeed abused its dominant position in the RVM market in five EEA countries, by implementing individualised loyalty rebates, exclusivity agreements, and individualised quantity commitments. The rebates were found to have the following characteristics:


  • Identified customers were entitled to rebates on their whole purchase order where they reached a given purchasing target during a period.


  • The thresholds related to the total requirements of the customer or a large proportion thereof. They were established on the basis of a particular customer's estimated requirements or purchasing volumes achieved in the past.
  • Some rebates contained progressive discounts relating to two or more thresholds. The first threshold would correspond to a substantial proportion (over half) of the customer's estimated or actual requirements, while the higher bonus thresholds often corresponded to the customer's total demand.

These characteristics were found to be abusive, as customers who initially bought from Tomra had a strong incentive to continue to purchase from Tomra in order to reach the necessary threshold and reduce overall prices. This incentive artificially raised the cost of switching to a different supplier and thereby harmed competition.

As a result of these findings, the EC imposed a fine of €24million on Tomra.

On appeal to the General Court, Tomra argued that the per se approach endorsed by the Commission with no analysis of actual effects of the discounts has no basis in business practice. Tomra pointed out that the Commission had failed to establish:

  • that Tomra's conduct had in fact eliminated competition;
  • that Tomra had intended to eliminate competition; or
  • that the rebates had resulted in negative prices (i.e., below-cost pricing).

In a decision issued in September 2010, the General Court rejected these arguments and held (per Hoffmann-La Roche v Commission)2 that individualised retroactive rebates are intended to give the customer an incentive to obtain supplies exclusively from the dominant undertaking and are incompatible with the objective of undistorted competition, because they tend to remove or restrict the customer's freedom to choose its sources of supply and thereby deny competitors access to the market. Further, the court held, there is no requirement under the law to analyse whether the rebates actually had this effect on the market or to establish that there had been below-cost pricing.

After the failed appeal to the General Court, Tomra took the case to the ECJ.3 Tomra contended that the General Court had failed to show that:

  • Tomra had intended to foreclose the market;
  • the portion of demand that was foreclosed was a significant portion of the market; or
  • there had been any analysis to show that there had been below-cost pricing in line with the 2009 Commission Guidelines.

The ECJ confirmed the General Court's ruling and rejected the appeal.

Abuse of Dominance

The ECJ agreed with the General Court that "abuse of dominant position" is an objective concept and held that anti-competitive intent is only one factor relevant to whether there has been an abuse. Even if it were shown that the firm intended to compete on the merits, as Tomra asserted, there could still be an abuse of dominance, the ECJ held.

Further, according to the ECJ, it is sufficient to show that the firm's conduct has the possibility of producing an anti-competitive effect on the market. The ECJ held that it is not necessary to show that the conduct did in fact produce such an effect.


The ECJ concluded that by foreclosing part of the market, Tomra had restricted competition, because competitors should be able to compete for the entire market. The ECJ further held that it is not necessary to determine what percentage of a market must be affected before conduct would be classified as abusive.

Retroactive rebates

The ECJ confirmed the General Court's formalistic assessment of "retroactive" rebates (per the longstanding precedent of Hoffmann-La Roche v Commission). The ECJ held that it is not necessary to prove that a retroactive rebate actually resulted in below-cost prices. Instead, the specific characteristics of the rebate scheme will determine whether it is abusive.

The ECJ held that retroactive rebates have a "suction" effect that would inherently drive out Tomra's competitors. Customers would choose Tomra to supply the contestable part of demand over other competitors, as this would mean that the effective price of the last units bought by the customer was very low. As this effect tends to be anti-competitive, according to the ECJ, it is unnecessary to carry out an analysis of the actual impact. The ECJ cited and by inference agreed with the Advocate General's position that the 2009 Guidelines had no relevance to the 2006 decision under review.

Uncertainty in the Law

The approach taken in Tomra contrasts with the shift that has been seen in the ECJ's approach in other cases, such as the French Broadband predatory pricing case,4 where a more effects-based enforcement approach was taken (see DechertOnPoint "Predatory Pricing in the EU: The French Broadband Case" April 2009).

There is significant uncertainty surrounding rebate schemes following the latest Tomra judgment. The ECJ's ruling that there is no obligation for the Commission or the General Court to examine separately whether the price charged by Tomra was lower than its "long-run average incremental costs," in relation to the retroactive rebate scheme, is in direct contrast to the Commission's Guidelines. As the Tomra case pre-dates the Commission Guidelines, it remains to be seen whether the ECJ will approach future cases differently. Further, the Guidelines are not binding, so the tension between the effects-based Guidelines and the formalistic approach of the Tomra decision may persist.

This tension is illustrated in the Intel case,5 where the Commission followed its 2009 Guidelines and applied the effects-based approach to find that the rebates in that case were abusive (see DechertOnPoint "Uncertain Times for Dominant Firms: The EU Commission's Intel Decision Finally Becomes Public" October 2009). However, the Commission in Intel also performed a separate analysis of Intel's rebates under the traditional per se approach and found the rebates to be abusive under that alternative approach as well. The Intel decision has been appealed to the General Court, but no judgment has yet been handed down. No other judgments have been issued by the General Court or the ECJ on rebates following the introduction of the 2009 Guidelines.

In practical terms, if the General Court and the ECJ continue to use the formalistic per se approach when reviewing Commission decisions made subsequent to the publishing of the 2009 Guidelines, the effects-based approach may become irrelevant. In the meantime, the confusing tension between the two approaches persists.

Rebate Schemes Can be Pro-Competitive

There are strong arguments for holding that rebates should in the first instance be seen as pro-competitive. Dominant firms may employ rebate schemes for justifiable commercial reasons, such as to achieve economies of scale or to assist in the introduction of new products to the market.

Where there have been no negative effects on the market following the introduction and during the span of a rebate scheme –– such as the dominant entity's pushing out competitors and then raising prices, lowering quality, or slowing down innovation — it is difficult to justify the assertion that the practice is anti-competitive.

Indeed, preventing dominant entities from implementing rebates may harm consumers as they will end up paying higher prices for their goods. This potential may be a good reason to suppose that the Commission will continue to move towards a more effects-based approach in the future, despite the Tomra judgment.

Contrasts With the US Approach

While the US courts and antitrust enforcement authorities have not settled on a consistent approach to loyalty discounts, most US variations differ markedly from the approach taken by the EU courts and, to a lesser extent, by the European Commission's Guidelines. The US approaches tend to break down into some form of either predation or a de facto exclusive dealing analysis. Either approach would impose on the governmental or private challenger the burden of proving that a loyalty discount would have an actual exclusionary impact across a significant portion of the relevant market.

Any predation analysis would also require proof that the dominant firm could recoup its losses from a bundled discount — a requirement that is also absent under the EU approach as applied by both the Commission and the courts.


There is significant uncertainty created by the tension between the ECJ's Tomra decision and the 2009 Guidelines. Until there has been an EU court review of a Commission decision applying the 2009 Guidelines, a dominant company should err on the side of caution and operate on the basis that the per se approach used by the ECJ remains good law. Accordingly, dominant companies should avoid using individualised and retroactive rebates, and should also undertake a review of any rebate scheme that was adopted in reliance on the effects-based approach described in the 2009 Guidelines.


1 Case 27/76 United Brands Company and United Brands Continentaal v Commission [1978]; and Case C-85/76 Hoffmann-La Roche v Commission [1979].

2 Case C-85/76 Hoffmann-La Roche v Commission [1979].

3 Case C-549/10 Tomra Systems ASA and Others v European Commission [2012].

4 Case C-202/07 France Télécom, S.A. v Commission [2009].

5 COMP/C-3 /37.990 Intel [2009].

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.