Part IV of the Competition and Consumer Act 2010 (the Act) prohibits various anti-competitive practices that limit or prevent competition. It aims to foster the competitive environment necessary to give consumers diversity of choice in price, quality and service for goods and services. For example, Part IV prohibits specified cartel conduct and other forms of conduct among competitors that substantially lessens competition in a market. A reduction in competition that may occur as a result of the collusion might allow some traders to push prices up and lower the quality of the goods and services they offer to consumers.
Some anti-competitive conduct is prohibited on the basis that it has particular anti-competitive purposes or effects (i.e. cartel conduct such as price fixing or bid rigging), while other conduct is prohibited if it substantially lessens competition. A substantial lessening of competition may occur, for instance, when the ability of buyers to shop around for a deal that suits them is significantly diminished by an anti-competitive agreement among suppliers.
There are some circumstances in which an individual decision by a supplier to refuse supply is unlawful under the Act. These include a misuse of market power, third line forcing, boycotts, resale price maintenance and placing limitations on buyers and resellers that substantially lessen competition. Further information on these anti-competitive practices can be found in the ACCC publication Refusal to deal.
The new provisions initially apply only to the banking sector, and only in relation to the taking of money on deposit and making advances of money or loans.
The Act sets out a civil cartel prohibition and a criminal cartel offence. Both are based upon the existence of a ‘cartel provision’ in a contract, arrangement or understanding between competitors.
The Act has specific provisions prohibiting powerful players from abusing their market power. These are contained in s.46, which prohibits the misuse of market power.
Predatory pricing occurs when a company sets its prices at a sufficiently low level with the purpose of damaging or forcing a competitor to withdraw from the market.
