Rebates means that a seller of goods discounts the price to a buyer according to the contact or agreement between seller and buyer, including loyalty rebates which require a exclusionary conduct. Rebates by dominant firms raise complex issues and competition enforcers and courts strive to identify workable standards for distinguishing between pro and anti-competitive effects. On the one hand, discount is the essence of competition and is what consumers desire; on the other hand discount under certain circumstance may have exclusionary effects and therefore threaten competition. The challenge for competition authorities is to draw a clear dividing line between pro and anti-competitive rebate schemes and to provide businesses with a workable standard of review.
Since Intel has violated MRFTA by offering loyalty rebates to customers in Korea, it has also caused many debates on how to assess the effects of the loyalty rebates on competition and how to distinguish legitimate competition practices from exclusionary practices. A loyalty rebate as a misconduct of market dominant power must be treated from a view point of exclusionary practice, different from a view point of normal discount. It is very important to assess the pro-competitive and anti-competitive effects of loyalty rebates based on facts and data available in each case. It requires economic theoretical studies on the effects of loyalty rebates, but existing economic literature on loyalty rebates is not enough yet. More researches on loyalty rebates should be done for implementing competition policy on the abuse of dominant firm in the future.