18
Competition Law and Policy
© Oxford University Press, 2007. 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, 96-100;
• 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 anticompetitive 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.