18 Competition Law and Policy © Oxford University Press, All rights reserved.

Competition Law & Policy Learning Objectives: Understand the nature and rationale of competition law and policy in Australia; Understand what is meant by a restrictive trade practice; Explain the prohibited conduct under Part IV of the TPA; Explain what is meant by the following restrictive trade practices: price fixing, third line forcing and retail price maintenance; Understand when an entity or individual has misused their market power; Explain the nature and role of the law regulating mergers and acquisitions; Understand the penalties and breaches of Part IV of the TPA.

Competition Law & Policy cont... What is Competition Law? Parts IV and VII of the TPA Regulating restrictive trade practices Policy of promoting free and fair competition Consumer welfare promoted through consumer choice

Competition Law & Policy cont... Purposes of Part IV TPA Horizontal Restraints:- Conduct that restricts competition between competitors; Vertical Restraints:- Conduct that restricts the ability of suppliers or customers to engage in lawful trade; Misuse of market power; Mergers and acquisitions that have the potential of undermining competition.

Competition Law & Policy cont… Prohibited Conduct under Part IV of the TPA Anti-competitive agreements and exclusionary provisions, including primary or secondary boycotts: s.45; Misuse of market power: s.46; Exclusive Dealing: s.47; Resale Price Maintenance: ss.48, ; Mergers that would have the effect or likely effect of substantially reducing competition in a substantial market: ss.50 and 50A.

Competition Law & Policy cont... Price Fixing Section 45A of the TPA Contract, arrangement or understanding between competitors Substantially lessening competition

Competition Law & Policy cont... Sections 45-45EA deal with a variety of anti- competitive agreements including:- Agreements that involve market sharing of goods: s.45(2); Agreements that contain an exclusionary provision: s.45(2); Price Fixing Agreements: s.45A; Secondary Boycotts: ss.45D-45EA.

Competition Law & Policy cont... Misuse of Market Power Section 46 of the TPA prohibits a corporation that has a substantial degree of power in a market from taking advantage of that power. Key elements of section 46 are:- Substantial degree of market power; Take advantage. See also: Melway Publishing Pty Ltd v Hicks Pty Ltd and Queensland Wire Industries v BHP.

Competition Law & Policy cont... Third Line Forcing Sections 47(6) and 47(7) of the TPA prohibit a supplier dealing with a customer on the condition that the customer will acquire goods or services from a third party. Limits the ability of the buyer of the good to choose between suppliers of another product (ie reduces fair competition). See:- TPC v British Building Society.

Competition Law & Policy cont... Resale Price Maintenance Section 48 of the TPA Agreement which attempts to set a minimum price (or floor)

Competition Law & Policy cont... Types of Resale Price Maintenance Agreements Agreeing with a reseller that the latter will not advertise or sell below a specified price; Setting a minimum price at which resellers should advertise, display or offer their goods for sale for the resupply of services; Inducing resellers not to discount; Taking or threatening to take action against a reseller to force the reseller to sell the goods or resupply services at or above the minimum specified price; Indicating a price that is taken by the reseller as a price below which the reseller should not resell.

Competition Law & Policy cont... Mergers & Acquisitions Section 50 TPA (domestic mergers) and Section 50A (offshore mergers). Effect or likely effect of substantially lessening competition in a market. Can apply to ACCC for merger authorisation. See:- Toll Holdings Ltd v Patrick Corporation Ltd [2006] FCA

Competition Law & Policy cont... Penalties & Remedies Monetary penalties of up to $10 million for companies and monetary penalties of up to $500,000 for individuals: s.76; Injunctions: s.80; Damages: s.82; Divesture of shares or assets that have been acquired in the case of an unauthorised merger: s.81.

Competition Law & Policy cont… Penalties & Remedies cont… Other orders made by court application to an aggrieved party including specific performance, rescission of a contract and variation: s.87; Probation orders, community service orders and corrective advertising orders: s.86C; Adverse publicity orders: s.86D; Compensation orders to a victim: s.79B. See also: ACCC v Australian Safeway Stores Pty Ltd [2003] FCA.