Restrictive Trade Practices: Designed to Achieve Workable or Effective Competition

Topics: Competition, Pricing, Anti-competitive behaviour Pages: 15 (3951 words) Published: October 14, 2009
Part IV - Restrictive Trade Practises
Designed to achieve workable or effective competiton
-2 categories of prohibitions in the act.
a) absolute prohibitionsconduct under these is assumed anticompetitive and prohibited outrightIllegal Per SeCan be authorised
collect boycotts or exclusionary provisionss45YesYes
price fixing s45YesYes
misuse of market powers46
3rd Line Forcings47
resale price maintanences48
b) substantial lessening of competitionconduct is prohibited if it either has the purpose or effect of substantially reducing competition or will have the likely effects50

Determining a s45 Breach:
*To establish a general breach of s45 there are 3 steps 1There is an agreement - meeting of the minds..requires parties to have communicated with each other and aroused
an expectation in the mind of the other that they will undertake an obligation to act in a particular matter
(Need to establish that it's collusion not just market forces / parellel conduct) 2The agreement is between competitors
3 elements to determining competitors; 1 Product and Services - offer or sell same substitutable products; 2 Geograhpy
do they operate in the same market, 3 Function - do they perform same function in the market 3The agreement has the purpose or effect of substantially reducing competition.
need to evaluate the purpose or effect of the action - did competition in the market become adversly affected &
substantially reduced competition

s45 Collective Boycotts
*Competitors agree not to supply or acquire g&s unless the supplier or customers accepts terms and conditions. *An example of a collecting boycott is a market sharing arrangement where competitors agree not to compete with one another

by dividing the market up between them
*A collective boycott is an agreement between competitors which has the purpose of the following: preventing/restricting or limiting
the: supply of g&s to a particular person or classes of persons
:supply of g&s to a particular person or class of person unless circumstances exist or conditins are met
:acquistion of g&s from a particular person or class of person
:acquistion of g&s from a particular person or class of persons unless particular circumstances exist or certain conditions are met and agred *A collective boycott is prohibited if the parties to it merely posses the requisite purpose (as per above) *s76 is a general defence against boycotts and is available where the agreement is pursuant to a JV and it doesn't have the effect of

substantially lessening competition.

s45 Price Fixing Agreements
*s45 deems price fixing as an anticompetitive purpose
*Price fixing limits competition by decreasing choice as the consume will be deprived of the choice between lower price and service
or higher price and better service; will also impact on product innovation, service and availability *3 steps to determining price fixing;
1. an agreement, contract, arrangement or understanding
2. an agreement between competitors
3. does the agreement have the purpose or effect of fixing controlling or maintaining prices *fixing, controlling or maintaining prices, includes making provisions for prices to be set according to an agreed formula, may be sold

or fixing max or min prices at which g&s or services rendered - also includes discounts, rebates, allowances or credits *Exemptions to price fixing can be given where there is joint buying and selling advertising agreements. Schemes can be procompetitive

especially when small portion of traders competing in that market *Defence to price fixing may be where a JV may lead to the opening up of a market because of limited financial resources of the individual

companies involved
*Case: ACCC V...
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