• The Competition and Consumer Act 2010 (Cth) will apply to conduct outside Australia if you are an Australian citizen or someone who ordinarily resides in Australia.
• A company that was incorporated in Australia or that conducts business in Australia needs to make sure that any conduct it engages in outside Australia complies with the legislation.

• A non-Australian company can be considered to be doing business in Australia through a subsidiary. In this situation they must comply with the Competition and Consumer Act 2010 (Cth) where:

1. the company communicates (including phone calls and emails) from abroad with its subsidiary in Australia; and
2. the parent company controls or directs the way in which the Australian subsidiary carries out the agreement.

• Discounts, rebates and credit are important elements of pricing to keep in mind when setting prices.
• You should set prices independently and not discuss or agree on what prices to set with any competitors. This may constitute price fixing. 
• Only publicly available information should be used to find out about your competitor’s prices.
• Do not agree to any requests by another business to jointly fix prices or restrict business activities. This could be considered price fixing, market sharing or a collective boycott.
• You may be regarded as engaging in unconscionable conduct if you set unusually high prices on a buyer or seller who is in a considerably weaker position than you.
• If a purchaser will be reselling the goods and services you supplied you can recommend a retail price but you cannot impose a minimum price on the re-sale. This is referred to as resale price maintenance and is prohibited by the Competition and Consumer Act 2010 (Cth).
• You could be misusing your market power by engaging in predatory pricing if you consistently price your goods and services below cost to drive out other businesses in the market.
• You need to avoid making your prices conditional on the buyer conducting business with a specified third party. This behaviour risks breaching the prohibition on third line forcing.

• Avoid consistently pricing below cost or trying to block all the key sources of supply as this may be considered a misuse of market power.
• Do not offer to sell goods or services on the condition that the customer also purchases goods and services from another business as this may be third line forcing.
• If you get together with a competitor to put pressure on another business to do what you want you will be engaging in collective boycotting.
• You can avoid anti-competitive conduct by refusing to make agreements with your competitors about prices or sharing the market in a particular way.
• It is also worth mentioning that salespeople should not mislead or misrepresent the business’s product or services through sales pitches or marketing campaigns. Conduct that is misleading and deceptive or likely to mislead or deceive is prohibited under the Competition and Consumer Act 2010 (Cth)

Question

A well-known company has approached me and a couple of other farmers in the same area to buy our crop. We believe we will be in a stronger position if we negotiate together rather than individually since this company is quite large and will most likely operate on a take it or leave it basis with little room for negotiation if they can deal with each of us separately. Should we be notifying the ACCC or seeking an authorisation from them?

Answer

• You may wish to seek an authorisation from the ACCC or simply notify them of your intentions. A notification is an alternative to authorisation and is only available in some cases but does include small business bargaining.
• A notification may be more appropriate than an authorisation in circumstances where:

1. all members of the bargaining group can be identified and are unlikely to change over time;
2. there is a single supplier or customer with whom the group is looking to negotiate;
3. the total annual value of the transactions each member of the group reasonably expects to have with the supplier or customer will be less than $3 million (this threshold differs for some industries); and
4. the exemption from legal action under the Competition and Consumer Act 2010 (Cth) is needed for less than 3 years.

• Anyone who is a party to a collective bargaining arrangement can lodge a notification on behalf of their business and the other businesses that will be party to the collective bargaining arrangement.
• Where a notification is lodged on behalf of other members it must clearly identify all the businesses involved and show that they all consent to the notification being lodged on their behalf.

Question

I have previously supplied goods to a customer who has been consistently late in paying me and he only pays after numerous attempts to recover payment. This has been going on for a period of 2 years. He has become rude and difficult to deal with and I have heard from industry contacts that he has also been bad-mouthing my business and the quality of my products. Initially I needed his business because I was just starting out. My company has since been doing quite well and I no longer need or want to deal with this customer so I refused to fill his latest order. He told me it was illegal to refuse to supply him with goods and that he will be reporting me to the Australian Competition and Consumer Commission (ACCC) if I stop doing business with him. Will I be breaking the law if I refuse to supply him?

Answer

• As a supplier you generally have the freedom to choose who you do business with as long as the refusal to supply is not intended to and is not otherwise likely to substantially reduce competition. 
• However there are some situations where a supplier’s refusal to supply goods or services is illegal such as when the supplier is:

1. involved in a collective boycott;
2. misusing their market power;
3. engaging in exclusive dealing;
4. imposing minimum resale prices on its retailers; or
5. acting unconscionably.

• Based on the situation you have described your refusal to deal with this customer is based on his late payments and conduct. It is unlikely that your refusal would be considered anti-competitive or illegal.
• If your company has substantial market power it will be worthwhile having us assess the specific circumstances of your case including any contracts that might be involved. We will be able to assist you in evaluating whether you are at risk of any misuse of market power. 

Question

I am currently in negotiations with a friend who is also a small business owner to merge our companies. My friend tells me that he has looked into this and we do not need to notify the ACCC as our merger is not going to affect competition in the market. I am concerned that any contracts we enter into together may unravel and we may face penalties if this merger is not properly authorised. I would like to know what could happen if we went ahead with the merger without notifying the ACCC.

Answer

• Your friend is correct in saying that parties to a merger are not legally required to notify the ACCC of the merger. The fact that you are not legally obliged to notify them does not prevent the ACCC from investigating the merger on their own initiative.
• Your concerns about proceeding with the merger without notifying the ACCC are justified. It is possible that you and your friend would be placed at risk of possible legal action by the ACCC or other interested parties. 
• The safest option is to voluntarily approach the ACCC regarding the merger to discuss any possible competition issues.
• If you decide not to approach the ACCC and the ACCC decide to challenge the merger, the ACCC can take legal action including:

1. injunctions stopping the companies from completing transactions or preventing business reconstruction after an acquisition;
2. forced divestiture (selling) of the companies’ assets; 
3. compensation for customers or competitors; and
4. imposing up to $10 million in penalties on a company. The company’s key employees can also face up to $500,000.

• In practice, the ACCC rarely takes action against small businesses that merge unless their industry is highly specialised and they are in a position to affect prices in the market.

Question

I am receiving complaints from some of my resellers that another of my resellers has been consistently selling my products below cost. They are very quickly losing their customers and it is affecting other areas of their business too. I have tried speaking to the reseller but he says that I cannot tell him what price to charge. Is there anything I can do about this?

Answer

• While you can recommend a retail price to the reseller you can't put any pressure on them to charge above a particular price. 
• If the reseller is not selling your products below cost as part of a genuine clearance he may be engaging in what is called loss leader selling.
• Loss leader selling occurs where goods are purchased with the intention of selling them below cost so that a reseller can:

1. promote their business; or
2. attract customers who are likely to buy other goods and services from the reseller. 

• If you have not agreed to supply goods to the reseller for the purpose of loss leader selling you may withhold supplies of goods to the reseller while he is engaging in loss leader selling.
• However if you refuse to supply goods to the reseller and it eventuates that he is not loss leader selling you may find yourself in breach of your supply agreement or any contracts that might be in existence. Before taking any action against the reseller you should seek our advice. 

Question

I have signed a contract to hire a venue to host a sales conference. I have now been contacted by their events co-ordinator asking me whether I will be serving food at the sales conference. I said that I plan to have my own caterer who I have worked with before. The co-ordinator told me that if I will be serving food I need to use someone from their list of approved caterers otherwise I will not be allowed to go ahead with the venue hire. It is too late to source another venue as I have already listed this venue on our marketing materials. Do I have any choice in this?

Answer

• The venue can suggest a list of caterers for you to use but it may be illegal for them to insist that you use the catering services from a specified person or business as a condition of providing you with the venue hire service. This type of behaviour may constitute third-line forcing. The Competition and Consumer Act 2010 (Cth) prohibits third-line forcing. 
• If the venue is threatening to cancel the hire you should review the termination provisions in the contract you signed to check the circumstances under which they can terminate. You may wish to have us assist you with this.
• If you want to go ahead with the venue hire but still want to use your own caterer it may be worthwhile having us speak to the venue on your behalf to inform them of the illegality of third-line forcing. There is a possibility they may not have been aware that this is prohibited by law.
• Before you speak to the venue you should make sure that what they are doing is third line forcing. You should always consult with us to ensure that you are on solid legal ground before enforcing your rights against another party.