De Facto Exclusive Dealing, Foreclosure, and Market Share Discounts

In recent years a number of cases have come before the courts in which market share discounts - arrangements in which a seller offers a buyer a lower price for its goods on the condition that the buyer purchases a specified minimum share of its requirements from the seller - have been alleged to have operated as unlawful de facto exclusive dealing arrangements. Almost all of these challenges have failed at the first hurdle of persuading the court that the discount arrangement forecloses competition. This paper identifies shortcomings in the courts' foreclosure analysis and, adopting the appropriate inquiry into foreclosure established in other de facto exclusive dealing cases, shows that market share discounts are capable of foreclosing competition. This paper also advocates for the use of a discount attribution test - similar to that employed in bundled discount cases - to determine whether a given market share discount forecloses competition.LL.M