Rebates are a common commercial practice in business and can have efficiency enhancing effects, leading to lower overall prices for customers and consumers. In addition, they might be used to stimulate downstream competition. However, rebates also have the potential to exclude rivals from a market, particularly when used by a dominant undertaking. For instance, a dominant firm’s use of loyalty rebates or exclusivity can, in some cases, harm consumers by reducing the ability of rivals to compete effectively. Rebates therefore have been scrutinized by competition authorities around the world for their potential to prevent, restrict or distort competition.
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