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Settling for a discount: A review of the pioneer foods price reduction remedy

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  • Liberty Mncube

Abstract

With Pioneer Foods admitting to its involvement in milled wheat and milled white maize cartels as well as engaging in general exclusionary conduct, there was little suspense over the existence of most egregious offenses in competition law and the subsequent harm to consumers and competition. For some, the competition law remedies and in particular the discount remedy that was adopted, following confirmation by the Competition Tribunal, constitutes a key measure of "success" for the case(s). This paper evaluates this claim by examining the design and effectiveness of the discount remedy, from a comparative perspective. We find that the period before, during and after the Pioneer Foods discount remedy, was characterised by increasing wheat prices. The discount remedy induced responses from Pioneer Foods' main competitors resulting in even wider gains for consumers than Pioneer Foods' own price reduction commitment.

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  • Liberty Mncube, 2014. "Settling for a discount: A review of the pioneer foods price reduction remedy," Agrekon, Taylor & Francis Journals, vol. 53(1), pages 26-45, March.
    • Handle: RePEc:taf:ragrxx:v:53:y:2014:i:1:p:26-45
    DOI: 10.1080/03031853.2014.887904
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    References listed on IDEAS

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    1. A. Mitchell Polinsky & Daniel L. Rubinfeld, 2005. "A Damage-Revelation Rationale for Coupon Remedies," Discussion Papers 04-009, Stanford Institute for Economic Policy Research.
    2. Borenstein, Severin, 1996. "Settling for Coupons: Discount Contracts as Compensation and Punishment in Antitrust Lawsuits," Journal of Law and Economics, University of Chicago Press, vol. 39(2), pages 379-404, October.
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