Neither the European nor the German antitrust law contain a general prohibition of discrimination. Every company is therefore in principle entitled to use authorised dealers for the granting of discounts to treat them differently even without any objective reason. At first glance, it is not clear why discounts could be problematic under antitrust law. The retailers benefit from low prices and the manufacturers from increased sales. However, discounts are problematic if they lead to the displacement of competitors.
1. Rebates and antitrust law
However, there is an exception to the general exemption from discounts for companies in dominant position. These are the so-called addressees of antitrust regulations under the GWB, which prohibit the exploitation of a dominant or strong market position. The granting of discounts by dominant companies can directly or indirectly result in either an unfair hindrance to competitors or unequal treatment of commercial customers without an objectively justified reason. If the company granting the discount does not have a dominant or strong market position, the company is free to structure the discount. The respective market position must be examined separately for each product in the range.
If the company is the addressee of the norm due to its market position, for example because other companies are dependent on it, the type of discount in question must be examined more closely for its anti-competitive effects. Loyalty discounts, for example, which a customer receives for covering all or most of his needs with the products of the company granting the discount, represent an indirect purchase obligation which results in an obstruction of competitors This applies in particular to product and range-related sales discounts. The length of the reference period and increases in discounts must also be included in the antitrust assessment.
If a company's abusive conduct can be seen in the form of an impermissible discount system, it is irrelevant whether the discount is included in the provisions of a distribution contract or an annual agreement.
2. On the company's market position
Only discount structures of companies with a dominant market position or a strong market position that is accompanied by dependence on dealers can be critical under antitrust law. In other words, either a dominant market position or a strong market position that goes hand in hand with dependence on dealers is required in order to have to assess discounts under antitrust law for anti-competitive effects. The market position always depends on the market share. In order to be able to determine the market share, the market must be defined objectively and geographically. All products and services that are interchangeable in terms of properties, intended use and price range to meet a specific need form a market under antitrust law. According to Section 18 Paragraph 4 of the GWB, market dominance is assumed from a market share of at least 40% on the respective sales markets affected. Irrespective of market shares, the abusive nature of a discount structure can also be considered if a company is to be regarded as a so-called strong market company for individual products. According to Section 20 (1) GWB, the restrictions resulting from the prohibition of abuse of a dominant market position also apply to companies “insofar as other companies are dependent on them as suppliers or buyers of a certain type of goods or commercial services in such a way that there are no sufficient or reasonable opportunities to switch to third companies and there is a clear imbalance with the countervailing power of the other companies (relative market power)”.
3. Dependent companies
Dependence exists when a customer is dependent on the market-strong company in order to maintain its competitiveness. Certain groups of cases for "dependence" have emerged in case law.
Assortment-related dependence exists when a retailer has to stock a certain product in order to be competitive (top position dependency), or the retailer has to offer several generally recognized branded products in order to be competitive (top group dependency). As a rule, the product range-related dependency is limited to the position as a specialist retailer and to branded products and services and the brand's reputation. In this respect, the end customer's expectation that the branded product is available from the retailer is crucial. According to case law, assortment-related dependency exists if "the absence of the goods in the retailer's range, where the public takes the offer for granted, leads to a loss of reputation and a significant impairment of competitiveness" or if "a manufacturer enjoys such a reputation and has achieved such importance due to the quality and exclusivity of its product that the requesting retailer, in his position as a supplier, is dependent on having this product in his range and therefore existing options to switch to other manufacturers do not prove to be sufficient and reasonable (BGH, decision of 12.9.2023 - KZR 39/21, NZKart 12/2023 - mattress price breaker; BGH, judgment of 9.5.2022 - KZR 28/98, NJW-RR 2000, 1286 - designer upholstered furniture)."
The product range-related dependency must be examined and determined separately for each market. In the case of product range-related dependency, it is irrelevant whether the retailer in question has brought about its dependency itself or whether the dependency is based on a mutual, in particular contractual, decision with the market-strong company. The decisive factor is whether, from a business perspective, the products of the company granting the discount cannot be exchanged for the products of other suppliers and competitors. If this is the case, the company granting the discount would be considered the "market leader" for the respective product.
A buyer is dependent on the companyif it is unreasonable for a customer to switch to other manufacturers and suppliers because the customer has become existentially dependent on the manufacturer or supplier due to existing business relationships. In the relationship between manufacturer and dealer, it is necessary that the dealer has aligned his sales policy to certain brands and items and therefore cannot simply switch to other brands or items. Business conditions Dependence is particularly important in the new car sales and vehicle supplier markets. In these markets, dealers or suppliers often have to make significant investments in the respective brand or the production of certain parts, so that switching to another brand or product would not be possible without significant new investments that would reach the threshold of endangering the company's existence (BGH, judgment of January 26, 2016 - KZR 41/14, NZKart 2016, 285 - Jaguar authorized workshop).
4. Discount type
a. Critical discounts and pull effect
Without a dominant or strong market position, there are no objections to discounts and the unequal granting of discounts. However, even in the case of a dominant or strong market position, not every discount, due to its conditions and purpose, leads to an unfair hindrance to competitors or to unequal treatment of customers without an objectively justified reason. Discounts lead to an unfair hindrance to competitors if they have a strong pull effect that leads to retailers concentrating their purchases on the addressee of the regulation in order to benefit from lower prices. On the other hand, discounts are objectively justified if the discount relates to a specific individual service provided by the customer and reflects a certain cost saving for the selling or transferring company. Consequently, if a discount is linked to a specific service provided by the retailer, discounts are also permissible for companies with a dominant market position or strong market position if the discount system is applied uniformly to all similar retailers and deviations are only made for objectively justified reasons.
b. Loyalty discounts
Furthermore, the specific design of the discounts is important, in particular the reference period, the discount scale, the reference value (quantity, product or range-related sales, proportion of demand coverage), the maximum amount of the discount and the time of payment. Loyalty discounts have a pull effect that violates antitrust law to the detriment of competitors if they are granted by companies that dominate the market or have a strong market position. Loyalty discounts explicitly compensate a retailer or customer for covering all or a large part of their demand from the company that dominates the market or has a strong market position. Loyalty discounts therefore aim to limit purchases from competitors.
c. Sales discounts
Sales discounts are considered critical under antitrust law if they are product- or product-related. Product-related sales discounts relate to sales of a specific product and thus to the purchase quantity of a product in a specific reference period. They are justified if they pass on cost savings of the market-dominating or market-strong company and the reference period is less than 12 months. Product-related sales discounts link the granting of discounts to the purchase of entire product ranges of software solutions and can therefore more easily than other discounts cause a retailer to try to cover all of its needs from the market-dominating or market-strong company, thereby creating a pull effect to the detriment of competitors. Product-related sales discounts are therefore considered inadmissible under antitrust law for market-dominating or market-strong companies.
In contrast, a total sales discount with a reference period structured quarterly is also considered permissible for companies with a dominant market position or strong market position. However, the prerequisite is that the discount rate does not increase disproportionately to the volume. The amount of the discount must therefore not increase disproportionately in relation to the increase in sales. This can, in individual cases, have an increased incentive for the dealer to generate high sales with the discounted products at the expense of competitors. On the other hand, this can lead to unequal treatment of dealers without an objectively justified reason if the same sales with the same software solution lead to different discounts because the total purchase has the effect of increasing the discount. If customers with a large sales volume make higher investments in employees, training, sales or marketing, for example, this would have to be taken into account in the assessment of fairness or objective justification.
d. volume discounts
So-called volume discounts, the amount of which depends on the quantity purchased for each individual delivery and which do not contain any jumps in the discount, are unproblematic and therefore reflect the supplier's cost savings. In contrast, false volume discounts are linked to the quantity purchased within a reference period and therefore have an impermissible pull effect to the detriment of competitors.
5. Summary
It therefore depends on the market position of the company granting the discounts and the effects of the discounts on competing products. If the seller's market share on the respective markets is below 40%, Section 18 Paragraph 4 GWB, the dealers and end customers can obtain supplies from other sources, i.e. competitors, on reasonable terms. This applies accordingly if dealers are not dependent on the product range or business, Section 20 Paragraph 1 GWB. It always depends on the respective product market. The broader the manufacturer's product range, the more complex the antitrust review and the risk that market dominance or dependence cannot be excluded.
