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TRADE PRACTICES LAW

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Title: TRADE PRACTICES LAW


1
TRADE PRACTICESLAW
  • DR. NILOUFER SELVADURAI
  • BUSL 852

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

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

4
CONSTITUTIONAL BASIS
  • Constitutional Basis
  • Corporations Power (s 51 (xx))
  • Trade and commerce (s 51(i))

5
ADMINISTRATION
  • Administration of Act
  • Australian Competition and Consumer Commission
  • Australian Competition Tribunal
  • National Competition Council

6
Administration of the Trade Practices Act
7
RESTRICTIVE TRADE PRACTICESLAW
  • DR. NILOUFER SELVADURAI
  • BUSL 852

8
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.

9
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

10
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

11
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

12
Purpose
  • The subjective purpose of parties
  • News Ltd v South Sydney District Rugby League
    Football Club Ltd (2003) 200 ALR 157.

13
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.

14
Market
  • Market is the area of close competition between
    firms.
  • Re Defiance Holdings Ltd (1976) 25 FLR 169

15
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

16
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

17
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

18
AUTHORISATION
  • Section 45 (9) - Contract which would otherwise
    contravene s 45(2) will not do so if authorised
    by the ACCC.

19
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.

20
PRICE FIXING
  • Price fixing
  • Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd
    (1983) 5 TPR 348.

21
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

22
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.

23
RESALE PRICE MAINTAINANCE
  • Test
  • Trade Practices Commission v Stihl Chain Saws Pty
    Ltd (1978) 3 TPR 306.

24
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.

25
Recommended Pricing
  • Recommended Pricing permitted
  • Section 97.

26
Illustrative Cases
  • ACCC v Hugo Boss Pty Ltd
  • TPC v Commodore Business Machines Ltd
  • Peter Williamson Pty Ltd v Capital Motors Ltd

27
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.

28
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

29
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.

30
Market
  • Market is the area of close competition between
    firms.
  • Re Defiance Holdings Ltd (1976) 25 FLR 169

31
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

32
Relevant considerations
  • Barriers to entry
  • Market share
  • Aggregating market power (s 46 (2))
  • Arbitrary behavior

33
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

34
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

35
5. EXCLUSIVE DEALING
  • Aim of s 47





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

36
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)).

37
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)).

38
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)).

39
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)).

40
EXCLUSIVE DEALING
  • Aiding, abetting, procuring, counseling or
    inducing any corporation to engage in any of the
    conduct referred to above (s 75B).

41
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.

42
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).

43
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.

44
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

45
DISCUSSION
  • DISCUSSION SEE SEPARATE
  • ISSUES PAPER
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