FTC Economists Explain How Loyalty Discounts Harm Competition in Network Markets Through Surescripts Case

The FTC's Division of Antitrust and Bureau of Economics released a Competition Matters blog post on February 13, 2026, examining how loyalty discounts—pricing arrangements that reward customers for purchasing exclusively or predominantly from one supplier—can stifle competition when network effects are present. The analysis, authored by Matthew Chesnes from the Division of Antitrust and Acting Bureau of Economics Director Ted Rosenbaum, uses the commission's case against Surescripts to illustrate these competitive harms.

The economists explained that loyalty discounts become particularly problematic in markets where network effects create value—situations where a product becomes more valuable as more people use it. In such markets, these pricing arrangements can prevent rivals from achieving the scale necessary to compete effectively, even when those rivals might offer superior products or services at lower prices.

The Surescripts case serves as the primary example in the analysis, though the blog post does not detail specific settlement terms or penalties. Surescripts operates electronic prescription routing networks that connect healthcare providers, pharmacies, and other participants in the prescription drug ecosystem—a market where network effects are crucial since the value of the network increases with the number of connected participants.

This analysis appears to be part of the FTC's broader effort to educate practitioners and businesses about competition issues in digital and network-based markets. The commission has increasingly focused on how traditional antitrust theories apply to modern technology-driven industries where network effects can create or entrench market power.

The blog post represents the latest in the FTC's Competition Matters series, which aims to explain complex economic theories underlying the agency's enforcement actions. By highlighting the Surescripts case, the economists are signaling how the commission views loyalty discounts in network markets and providing guidance for future enforcement priorities.

For antitrust practitioners, this analysis suggests the FTC will continue scrutinizing loyalty discount arrangements, particularly in technology and healthcare sectors where network effects are prevalent. Companies operating in such markets should carefully evaluate their pricing strategies to ensure they do not foreclose competition through exclusive dealing arrangements that leverage network advantages.