Restrictive Trade Practices - Competition Law - Lecture Slides, Slides of Competition Law and Policy

Download Restrictive Trade Practices - Competition Law - Lecture Slides and more Slides Competition Law and Policy in PDF only on Docsity! Restrictive Trade Practices Docsity.com Learning objectives At the end of this chapter you should understand: • the background to the passing of the Competition and Consumer Act 2010 (Cwlth) (CCA) and identify those responsible for its administration • the aims of the CCA • the definition of the terms ‘market’ and ‘competition’ • the restrictive trade practices prohibited by the CCA • process of authorisation and notification under the CCA • the roles of the Australian Competition and Consumer Commission, the Australian Competition Tribunal and the Federal Court of Australia • enforcement procedures and the remedies available under the CCA. Docsity.com Administration of the legislation • Australian Competition and Consumer Commission (ACCC) – Responsible for bringing proceedings for contravention of restrictive trade practices provisions – Grants authorisations, permitting conduct that might otherwise be in breach of the CCA – Research, public information and guidance role Docsity.com Concepts of ‘market’ and ‘competition’ • Market Includes all sellers competing for the same buyers • Competition A mechanism that ensures consumer needs are provided at the cheapest costs by businesses through control of the use of society’s resources. Docsity.com Cartel conduct prohibited—S44ZZRA-RV • A cartel exists where two or more businesses which should be operating in competition with each other agree to cooperate rather than act independently. • Prohibited cartel conduct includes: – price fixing – restricting outputs in the production and supply chain – allocating customers, suppliers or territories – bid or tender rigging. • Breach requires intention to enter an agreement which contained a cartel provision and intention to give effect to that cartel provision be established. Docsity.com Section 45: agreements or covenants affecting competition Must prove competition has been reduced • Prohibits the making of contracts, arrangements or understandings containing exclusionary provisions, or with the effect of substantially lessening competition in the market place. • Examples: – market-sharing agreements for territory – primary boycotts – limited amount of discount for areas – limited participation in other associations – limited numbers allowed to participate Docsity.com Section 45B: covenants annexed to or running with land • If they substantially lessen competition in market in which corporation or person supplies or acquires goods or services. Docsity.com Section 45C: price-fixing Do not need to prove competition is reduced • Prohibits covenants that have effect of price fixing, whether competition is lessened or not, i.e. practice of: – fixing – controlling – maintaining. Prices via allowing the same: – prices – discounts – allowances – rebates. Docsity.com Misuse of market power (cont.) • Section 46(6A) lists four factors that will assist the court in deciding if a person has ‘taken advantage’ of its substantial market power: – Was the conduct materially facilitated by the person’s substantial degree of market power? – Did the person engage in the conduct in reliance on its substantial degree of power in the market? – Is it likely that the person would have engaged in the conduct if it did not have a substantial degree of power in the market? – Is the conduct otherwise related to the person’s substantial degree of power in the market? • No authorisation is available for this conduct. Docsity.com Elements affecting market power • The ability of a firm to raise prices without losing customers • The firm’s conduct in the market is not affected by competitors. • Market share of the firm • Existence of vertical integration • Extent to which new participants can enter the market Docsity.com Section 47: exclusive dealing • Prohibits a supplier from imposing restrictions on the freedom of its customers to deal with others, and vice versa, if substantially lessening competition. • This section is concerned with ‘vertical’ restraints. • Note that the conduct is only prohibited if it has the effect of substantially lessening competition in a market for goods or services. • Notification and authorisation are available. Docsity.com Section 48: resale price maintenance (vertical price fixing) • Prohibits a supplier of goods and services from stipulating the minimum price at which goods to be supplied by them can be resold. • Sections 96–100: relevant qualifications and definitions required for s. 48. Docsity.com Section 50: mergers • Prohibits mergers and acquisitions if likely to substantially lessen competition in a market in an Australian state or territory. • Informal or formal clearance of a proposed merger may be obtained from the ACCC if the ACCC is satisfied that the merger or acquisition would not have the effect of substantially lessening competition in a market—onus is on the applicant. • If the merger will substantially reduce competition and so breach s. 50, authorisation may only be granted by the Australian Competition Tribunal on public benefit grounds. Docsity.com Matters to be considered for mergers • The actual and potential level of import competition in the market • Barriers to entry into the market • The level of concentration in the market • The extent to which substitutes are, or are likely to be, available • The degree of countervailing power in the market • The likelihood that the acquisition would result in the acquirer being able to significantly and substantially increase profits or profit margins Docsity.com Authorisations (except for Section 46: misuse of power) Sections 88–91: for conduct that may breach provisions, allowed if agreement will result in a benefit to the public that outweighs anti- competitive behaviour. Docsity.com Notifications • Notify commission that s. 47 (exclusive dealing) is to be infringed before authorisation that eliminates any liability that may result for contravention of section. • If disallowed after consideration, action must stop immediately or penalties will be imposed. Docsity.com Remedies and enforcement of Part IV • Pecuniary penalties: – fines of up to $500 000 for natural persons – maximum penalty for corporations is the greater of $10 million or 3 times the gain from the breach, or if the gain cannot be calculated 10% of the corporation’s turnover – fines of up to $750 000 for corporations who breach any of ss. 45D, 45DB, 45E or 45EA) • Adverse publicity orders • Injunctions (s. 80) • Divestiture orders (s. 81) • Damages (s. 82) • Ancillary orders (s. 87) Docsity.com