Taking a Look at Vertex

901 WordsFeb 19, 20184 Pages
Vertex claims the inventory costs of VLite are high, therefore tying practice is required to enhance sales of VLite. It is indisputable that the Commission recognizes pro-competitive effects of tying, such as lowering manufacturing or distribution costs by economies of scale, which is found to be important in this industry. According to para. 30 of the Guidance, Vertex has to prove that the tying is indispensible to achieve the same efficiencies. Also, following Hilti Vertex needs to show that it has taken other actions if possible in order to lower the inventory costs. Given such a high standard of proof, it is very likely that Vertex would be found violated the Article 102(d) by contractual tying. 1. Conditional Rebate Scheme Vertex introduced standardized and individualized target rebates to distributors in the Western Europe. Target rebates may not be problematic if they are indeed genuine quantity-based, but a target rebate may be found abusive if it limits the buyer’s freedom to choose (Michelin I). Nonetheless, rebate schemes may result in suction effect – the dominant firm lowers the average price of its products and captures contestable sales which the firm was unable to capture before. Vertex offered two largest distributors in the market rolled-back target rebates. Under this scheme, rebates were applied to the total turnover previously realized over a certain period. The court has been harsh in treating rebates without fully considering the theory of harm of
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