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A producer of polypropylene films and an international producer in the food industry were in a contractual relationship that included a rebate agreement. In the context of the cash flows between firms associated with this agreement, the Mexican tax authorities concluded that the operations of the film producer may be liable for unpaid taxes. A rebate agreement, as many other vertical relationships between producers and input suppliers, are common in global supply chains.
Oxford Competition Economics was retained by the film producer to provide expert testimony in economics and industrial organization. The testimony was regarding the nature of the rebate agreements, their economic relevance and usefulness in the context of international supply chains and the economic reasons behind the need to incur cross-payments associated with these rebate agreements in the context of the principle of taxation symmetry.