Conditional pricing and the AEC test – A happy marriage or an awkward couple?

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In this article the question is investigated whether and when conditional pricing and the AEC test form a happy couple. In situations where rebates are used to dampen competition between incumbents or as an exploitative device, applying the AEC test does not make sense. However, in cases where the theory of harm is that rebates are being used as an exclusionary device, applying the AEC test is in principle useful to help distinguish between abusive and non-abusive conduct, while recognising that in some limited exclusionary conduct scenarios it does not make sense to create a safe harbour for pricing above cost. The article looks at which cost benchmark to apply and investigates possible practical difficulties of applying the AEC test, making a number of suggestions how to apply the test to different types of rebates.