TRADE PRACTICES LAW

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TRADE PRACTICESLAW

• DR. NILOUFER SELVADURAI
• BUSL 852

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INTRODUCTION

• 1. Sources of Law
• 2. Aims of the Trade Practices Act 1974 (Cth)
• promote competition and
• protect consumers.

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INTRODUCTION

• 3. Application of the Act
• 4. Operation of the Act
• 5. Regulatory authorities
• Australian Competition and Consumer Commission.
• Australian Competition Tribunal.
• Federal Court.

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CONSTITUTIONAL BASIS

• Constitutional Basis
• Corporations Power (s 51 (xx))
• Trade and commerce (s 51(i))

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ADMINISTRATION

• Administration of Act
• Australian Competition and Consumer Commission
• Australian Competition Tribunal
• National Competition Council

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Administration of the Trade Practices Act
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RESTRICTIVE TRADE PRACTICESLAW

• DR. NILOUFER SELVADURAI
• BUSL 852

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1. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS
THAT RESTRICT DEALINGS

• Section 45(2)(a)(i)
• A corporation shall not make a8 contract or
  arrangement or arrive at an understanding if it
  contains an exclusionary provision.

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Arrangement or Understanding

• ACCC v Amcor Printing Papers Group Ltd (2000) 169
  ALR 344
• Top Performance Motors Pty Ltd v Ira Berk (1975)
  5 ALR 465

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Exclusionary Provision

• Section 4D
• An exclusionary provision gives rise to a
  boycott of a person or a class of persons
• Effect of competition is irrelevant

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Exclusionary Provision

• ACCC v Rural Press Ltd (2001) ATPR 41-804
• ACCC v Amcor Printing Papers Group Ltd (2000)
  169 ALR 344
• ACCC v Tyco Australia Pty Ltd (2000) ATPR 41-740

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Purpose

• The subjective purpose of parties
• News Ltd v South Sydney District Rugby League
  Football Club Ltd (2003) 200 ALR 157.

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2. CONTRACTS AFFECTING COMPETITION

• Section 45(2)(a)(ii)
• A corporation shall not make a contract or
  arrangement or arrive at an understanding if a
  provision in it has the purpose or is likely to
  have the effect of substantially lessening
  competition.

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Market

• Market is the area of close competition between
  firms.
• Re Defiance Holdings Ltd (1976) 25 FLR 169

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Competition

• An essential characteristic of effective
  competition is that no one seller has the power
  to choose its level of profits by giving less and
  charging more.
• Re Defiance Holdings Ltd (1976) 25 FLR 169

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Substantially lessening competition

• ASX Operations Pty Ltd v Pont Data Australia
  (1990) 27 FCR 460 at 478.
• Dandy Power Equipment Pty Ltd v Mercury Marine
  Pty Ltd (1982) 64 FLR 259

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Purpose and Effect

• Has the purpose
• Trade Practices Commission v Tubemakers of Aust
  Ltd (1983) 76 FLR 455
• Likely to have the effect
• Tillmanns Butcheries Pty Ltd v Australasian Meat
  Industry Employees Union (1979) 42 FLR 331
• Trade Practices Commission v Ansett Transport
  Industries (Operations) Pty Ltd (1978) 32 FLR 305

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AUTHORISATION

• Section 45 (9) - Contract which would otherwise
  contravene s 45(2) will not do so if authorised
  by the ACCC.

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3. PRICE FIXING

• Section 45A Prohibition against price-fixing
• A specific application of s 45 Without
  limiting the generality of s 45 (opening words
  of s 45A (1)).
• Essence Deems all price fixing and price
  maintenance provisions in contracts, arrangements
  and undertakings to substantially lessen
  competition.

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PRICE FIXING

• Price fixing
• Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd
  (1983) 5 TPR 348.

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PRICE FIXING

• (4) Section 45B Land covenants affecting
  competition
• Essence - Covenants annexed to land title is
  unenforceable if it confers rights or imposes an
  obligation on a corporation that would have the
  effect of substantially lessening competition in
  any market in which the corporation operates.
• (5) Section 45C

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4. RESALE PRICE MAINTAINANCE

• Section 48 Prohibits the practice of resale
  price maintenance.
• Section 96(3) in Part VIII of Act defines acts
  constituting resale price maintenance.

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RESALE PRICE MAINTAINANCE

• Test
• Trade Practices Commission v Stihl Chain Saws Pty
  Ltd (1978) 3 TPR 306.

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Definitions

• Likely to be understood
• BP Aust Ltd v Trade Practices Commission (1986)
  66 ALR 148.
• Induce
• Australian Competition and Consumer Commission v
  Mayo International Pty Ltd (1998) 85 FCR 327.

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Recommended Pricing

• Recommended Pricing permitted
• Section 97.

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Illustrative Cases

• ACCC v Hugo Boss Pty Ltd
• TPC v Commodore Business Machines Ltd
• Peter Williamson Pty Ltd v Capital Motors Ltd

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5. MONOPOLISATION

• Aim of s 46
• Section 46 is directed at monopolistic practices
  by corporations aimed at using their market power
  to unduly impair competition.

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Prohibited Conduct - s 46

• Section 46 prohibits a corporation with
  substantial market power from using that power
  to
• (a) Substantially damage or eliminate a
  competitor (or class of competitors 46(1A) in
  that or any other market

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Prohibited Conduct continued

• (b) Prevent the entry of person into that or any
  other market.
• (c) Prevent or deter a person from engaging in
  competitive conduct in that or any other market.

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Market

• Market is the area of close competition between
  firms.
• Re Defiance Holdings Ltd (1976) 25 FLR 169

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Market power

• Queensland Wire Industries Pty Ltd v BHP Co Ltd
  (1989) 83 ALR 577.
• Melway Publishing Pty Ltd v Robert Hicks Pty Ltd
  (2001) 205 CLR 1

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Relevant considerations

• Barriers to entry
• Market share
• Aggregating market power (s 46 (2))
• Arbitrary behavior

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Taking advantage

• Relevance of existence of business rationale
  Melway Publishing Pty Ltd v Robert Hicks Pty Ltd
  (2001) 205 CLR 1
• Predatory pricing Boral Besser Masonary Ltd v
  ACCC (2003) 77 ALJR 623

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Illustrative Cases

• Queensland Wire Industries Pty Ltd v BHP Co Ltd
  (1989) 83 ALR 577.
• Universal Music Australia Pty v ACCC 2003
  FCAFC 193
• Pont Data Australia Pty Ltd v ASX Operations
  Pty Ltd (1990) 21 FCR 385

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5. EXCLUSIVE DEALING

• Aim of s 47
• 
  
  
  
  
  
• Section 47(1) prohibits a corporation of engaging
  in a practice of exclusive dealing.

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Prohibited Conduct s 47

• Supplying goods or services on condition that
• the purchaser does not acquire goods or services
  from a competitor of the supplier (s 47(2)) or
• the purchaser accepts some restriction on the
  right to resupply goods (s 47(2)) or
• the purchaser acquires other goods or services
  from a third party (s 47(6)).

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Prohibited Conduct s 47

• Acquiring goods or services on the condition
  that the supplier accepts some restriction as to
  the freedom to supply third parties (s 47(4)).

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Prohibited Conduct s 47

• Refusing to supply goods or services because
• the purchaser has dealt or refused to cease
  dealing in a competitors products (s 47(3)) or
• the purchaser has failed to accept some
  restriction on the right to resupply (s 47(3))
  or
• the purchaser refuses to acquire other goods or
  services from a third party (s 47(7)).

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Prohibited Conduct s 47

• Refusing to acquire goods or services because
  the supplier refuses to accept some restriction
  on the right to supply third parties (s 47(5)).

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EXCLUSIVE DEALING

• Aiding, abetting, procuring, counseling or
  inducing any corporation to engage in any of the
  conduct referred to above (s 75B).

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ILLUSTRATIVE CASES

• OBrien Glass Industries Ltd v Cool Sons Pty
  Ltd (1983) 48 ALR 625.
• Castlemaine Tooheys Ltd v Williams and Hodgson
  Transport Pty Ltd (1986) 68 ALR 376.

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AUTHORISATION

• S 93(1) Commission can give clearance to a
  corporation to engage in a form of exclusive
  dealing outlined in s 47(2)-(9).

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6. ACQUISITIONS SUBSTANTIALLY LESSENING
COMPETITION

• Section 50 prohibits an acquisition of shares or
  assets which would have the effect of
  substantially lessening competition in the
  market.

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ACQUISITIONS SUBSTANTIALLY LESSENING
COMPETITION

• Section 88(9) and s 90(9) empowers the ACCC to
  authorize an acquisition that would otherwise
  breach s 50.
• The ACCC will authorise the acquisition where it
  is satisfied that the acquisition is likely to
  result in a benefit to the public

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DISCUSSION

• DISCUSSION SEE SEPARATE
• ISSUES PAPER