Formalism and Functionalism in Antitrust Treatment of Loyalty Rebates: A Comparative Perspective

It is a widely held belief that U.S. antitrust law has long been characterized by economic functionalism and that European antitrust law has long been characterized by legal formalism.\u27 The received wisdom began to change in Europe a decade ago when the Directorate General Competition of the European Commission (DG Comp) began to advocate a more effects-based analysis of abuse of dominance. Two factors arguably contributed to this change. First, the DG Comp became increasingly influenced by economists who had little use for the old formalism. Second, as Europe trie to spread antitrust to developing antitrust regimes across the world-and, in particular, to urge these regimes to adopt an EU-style competition law-it faced pressure to respond to American critics who charged that European antitrust law was too stodgy and formalistic. Effects-based economic analysis was the sort of stateof-the-art technocratic reasoning that could be sold as a neutral regulatory tool irrespective of local or regional circumstances, customs, or preference