aggregated rebate

aggregated rebate

or

overriding discount

a business practice whereby a supplier offers distributors/retailers a discount on their total purchases over a specified time period (usually one year) rather than on individual orders. The operation of aggregated rebates, by encouraging dealers/retailers to place the whole or a substantial part of their regular orders with one supplier, may help the supplier increase his sales and protect market share. However, if undertaken by a DOMINANT FIRM, the practice may serve to limit competition in a market by depriving rival suppliers of distribution outlets. See COMPETITION ACT, 1980, QUANTITY DISCOUNT, BULK BUYING.

Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson

aggregated rebate

a trade practice whereby DISCOUNTS on purchases are related not to customers’ individual orders but to their total purchases over a period of time. Aggregated rebate is used to foster buyer loyalty to the supplier, but it can produce anti-competitive effects because it encourages buyers to place the whole of their orders with one supplier, to the exclusion of competing suppliers. Under the Competition Act 1980, aggregated rebates can be investigated by the Office of Fair Trading and (if necessary) the COMPETITION COMMISSION and prohibited if found to unduly restrict competition.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005