David Sevy, Executive Vice President at Compass Lexecon in Paris co-authored a chapter with Christophe Lemaire, Partner at Ashurst LLP in the eighth edition of the LIDC Contributions on Antitrust Law, Intellectual Property and Unfair Competition, which captures the reports prepared by the international and national reporters at the League’s Annual Congress held in November 2019 in Paris, France.
Differentiation or discrimination can be defined as treating people, firms, or goods that are in a similar situation differently. In that sense, differentiation reverses the core principle of equality and is usually presented as a behavior that must be legally prohibited. The effect of discriminatory practices upon competition clearly depends on their nature. Whilst it is widely recognized that discriminatory practices aimed at excluding rivals are expected to harm the competitive structure of the market (for example, by forcing the exit of efficient competitors) and should be sanctioned and remedied accordingly (provided certain conditions are met), there is no consensus on second line discriminatory practices aimed at treating trading partners in equivalent situations differently, because their effects are more ambivalent. If those discriminatory practices tend on the one hand to be exploitative – appropriating more of the surplus of the consumer to the benefit of the discriminating firm – and have been analyzed as anticompetitive practices in some jurisdictions, they may also be a factor of economic efficiency and welfare. This chapter explores the boundary between anticompetitive and welfare-enhancing differentiation.
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