Page 68 - Azerbaijan State University of Economics

STUDYING OF SPECIAL PRACTICAL ISSUES OF ABUSE OF DOMINANCE

strategy leads to an increase in the quantity sold, then it should be considered

procompetitive.
Another way of discriminating among customers is to set up discount

schemes. Discounts usually refer to large single orders in which some

economies of scale (for example, in transport) lead to a reduction in the total
unit cost of supply. Other types of discounts are granted in relation to the

total orders placed by a customer in a certain period, for example, a year.
Such an effect is greatly increased when a dominant firm sells many products

and the discount scheme operates for all sales, irrespective of the quantities
of each product bought.

Although they might increase the cost of entry especially when

imposed with long-term contracts, discount schemes are a powerful
instrument of competition and normally benefit consumers. Moreover, they

can be justified on efficiency grounds, since they allow a firm to pass on to

customers substantial cost reductions - for example, because they bring about
a significant reduction of sales efforts.

Discounts can be restrictive if they become similar to exclusive
contracts-that is, if they are granted only to customers that agree not to buy

from other competitors, thereby raising barriers to entry. In this case,
however, what matters is the exclusive aspect of such contracts (how binding

and how lengthy is the exclusivity clause). In fact, the restrictiveness of

discount schemes must be analyzed case by case and should be assessed
according to the costs they inflict on new entrants and by the disadvantages

suffered by consumers.
Tie-ins. A tie-in is the sale of one product (the tying good) on condition

that the buyer purchase another product (the tied good). In general, such
behavior should not be considered abusive if the firm does not have market

power in the tying good. Even when the firm does, establishing that a tie-in

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