18 competition law and policy © oxford university press, 2007. all rights reserved

18Competition 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.


Price Fixing

• Section 45A of the TPA

• Contract, arrangement or understanding between competitors

• Substantially lessening competition


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.


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.


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.


Resale Price Maintenance• Section 48 of the TPA

• Agreement which attempts to set a minimum price (or floor)


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.


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


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.

18 competition law and policy © oxford university press, 2007. all rights reserved

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