A secret rebate is a kick-back that is made available to some customers or business partners but concealed from others, to the detriment of competition. The practice is usually illegal under state unfair business practice laws. [1]
A kickback is a form of negotiated bribery in which a commission is paid to the bribe-taker in exchange for services rendered. Generally speaking, the remuneration is negotiated ahead of time. The kickback varies from other kinds of bribes in that there is implied collusion between agents of the two parties, rather than one party extorting the bribe from the other. The purpose of the kickback is usually to encourage the other party to cooperate in the illegal scheme.
California offers an example of a law banning secret rebates:
The secret payment or allowance of rebates, refunds, commissions, or unearned discounts, whether in the form of money or otherwise, or secretly extending to certain purchasers special services or privileges not extended to all purchasers purchasing upon like terms and conditions, to the injury of a competitor and where such payment or allowance tends to destroy competition, is unlawful.— CAL. BPC. CODE § 17045 [2]
Cases interpreting California's provision include Eddins v. Redstone, 134 Cal. App. 4th 290 (2005) and Cleveland v. Viacom Inc., 73 F. App’x 736 (5th Cir. 2003). [3]
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