62 COMPETITION LAW IN TOURISM hurt them in the long term218. In the tourism sector, in particular, predatory pricing may take various forms, such as hotel chains that have far deeper pockets than independent hoteliers and may be able to (deliberately) suffer temporary losses to exclude competitors from the market. 6.1.3. ZERO PRICING This may also fall foul of competition rules219. Platforms in the digital age offer their services for free to their visitors, i.e. in principle, they might price below cost. This is due to the limited marginal cost per extra user and indirect cross- -subsidising of one side of the platform with revenue generated from the other side220. Free (or low-priced) services offered by online platforms do not constitute predatory pricing as long as: (i) the overall price level exceeds the average total cost of providing the service to the different sides of the market, or (ii) the overall price level exceeds the average variable but not total cost, and there is no intention to eliminate a competitor221. Policymakers may also argue whether predation is possible to occur even when an undertaking does not operate below costs, but relies on an asymmetric pricing scheme, lowering prices significantly on one side of the market to promote user growth222. In this connection, penetration pricing may also be interesting, for example, on some online accommodation intermediaries, customers get credit upon their initial subscription, which can be recovered afterwards. For the relatively small player and/or new entrant, it can be quite hard to compete with such pricing policies. 6.1.4. REBATES AND DISCRIMINATORY PRICING Exclusivity and conditional rebates, i.e. practices inciting particular type of purchasing behaviour through various refund or reward schemes, may violate Article 102 TFEU if they are operated by dominant companies. Interestingly, one of the landmark EU cases concerning rebates originated in the tourism sector and concerned specific reward schemes operated by British Airways, in 218 See, e.g. Andreas Papatheodorou (Ed.), Corporate Rivalry and Market Power: Competition Issues in the Tourism Industry, 1st edition, I.B. Tauris, London, 2006. p. 6. 219 Frisco Bostoen, Online platforms and pricing, supra note 212, p. 267. 220 Ibid. p. 263. 221 Frisco Bostoen, Online platforms and pricing, supra note 212, p. 270. 222 Kenneth Bamberger, Orly Lobel, Platform Market Power, Berkeley Technology Law Journal, Vol. 32:1051, 2017, pp. 1051-1092, available at: https://doi.org/10.15779/Z38N00ZT38, p. 1083.
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