The Cost of Exclusive Rebates
Competition Commission of Switzerland (“Comco”) in end of July 2014 imposed a fine of Euro 1.5 million on a Swiss news agency Schweizerische Depeschenagentur (“SDA”) after a two-year investigation of its exclusivity agreements.
Nature of offence
SDA is a dominant undertaking in the Swiss marker for news agency. It was held to breach the Swiss competition law by granting illegal exclusive rebates for its news subscriptions to certain customers on condition that such media companies would not purchase similar packages from SDA’s competitor, AP Schweiz.
Such rebates during 2008-2010 distorted competition in the relevant market by driving its competitor, AP Schweiz, from the domestic market for national and international news in German (AP Schweiz had to close its office in 2010, leaving SDA the only supplier of the news services in German).
SDA and Comco reached the settlement it this case. Due to SDA’s cooperation with the Comco’s investigation, the fine was reduced by 10 per cent. In addition, SDA has agreed to cancel its exclusive rebates and provide rebates in a transparent and non-discriminatory way.
Interestingly that the Comco’s decision comes shortly after the General Court’s ruling in Intel case upholding Euro 1,06 billion fine for implementing abusive exclusive rebates.
Due to increased attention to rebate schemes from the regulators’ side, companies, particularly the ones with strong market power, must be careful in implementing exclusive (and near exclusive) rebate, which in most cases are considered by their nature as anticompetitive.