Crane's Section 2 Hearings Testimony on Loyalty Discounts

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Joshua D. Wright, Crane's Section 2 Hearings Testimony on Loyalty Discounts, Truth on the Market (November 27, 2006),

Dan Crane (Antitrust Review, Cardozo) has graciously posted his testimony for Wednesday’s FTC/ DOJ Section 2 Hearings on Loyalty Discounts. Readers familiar with Crane’s scholarship on bundled discounts in the Chicago Law Review and Emory Law Journal will not be surprised that it is thorough, careful, mindful of the role that administrative costs should play in designing antitrust liability rules. At the end of the day, Professor Crane proposes a Brooke Group style-discount reallocation rule for bundled discounts, which he articulates as follows: “that the bundled discounts resulted in at least one product in the package being sold at less than cost, after reallocation of the discounts on the other products in the package to the predatory product.” Interested readers should go read Professor Crane’s testimony.
I am also looking forward to seeing TOTM co-blogger Thom’s remarks (who will also be testifying) on this subject, which has become a relatively hot antitrust issue after LePage’s. The panel lineup looks interesting, and also includes Joseph Kattan, David Sibley, Barry Nalebuff, Janusz Ordover, Willard Tom, and my colleague Tim Muris. I am particularly interested in the bundled discount testimony because it has substantial overlap with many of the issues raised in the exclusive dealing session which I participated in, and the relationship between the economics of exclusive dealing and various types of discount contracts.