Applying for an exemption
The CCA recognises that there may be circumstances where greater public benefits would result from allowing certain business behaviour that may restrict competition. For example, common public benefits from exclusive dealing conduct may include:
- more efficient business operations
- improved product quality
- the promotion of competition.
The ACCC can allow businesses to engage in conduct that may otherwise breach the competition provisions of the CCA.
If the ACCC allows an exemption, the applicant is protected from legal action under the CCA.
There are two administrative processes that can be followed by applicants seeking an exemption from the exclusive dealing prohibition: authorisation and notification.
Parties can apply to the ACCC for authorisation where they believe that there is some risk that the conduct they propose to engage in would or may breach the CCA, and they require the certainty provided by an authorisation to undertake the activity.
In general, the ACCC may grant authorisation if it is satisfied that the proposed conduct is either:
- unlikely to substantially lessen competition or
- likely to result in a net public benefit (i.e. the benefits to the public outweigh any likely detriments to the public).
A business seeking to have proposed exclusive dealing conduct authorised must apply to the ACCC before engaging in the conduct. Authorisation cannot be granted retrospectively.
In order to seek authorisation a business must prepare a submission outlining the markets likely to be affected by the proposed conduct, as well as the likely competitive effects and the likely benefits. A lodgement fee is payable to the ACCC (see the Fees and forms page).
The applicant must not engage in the conduct until the ACCC has granted authorisation. The ACCC will authorise the conduct if it considers that the legal test has been satisfied.
See: s88-92 of the CCA
The notification process is simpler and cheaper than the authorisation process. It allows parties to engage in exclusive dealing conduct provided they have lodged a notification with the ACCC before engaging in the conduct.
Protection from legal action commences as soon as the notification is lodged. The ACCC will only revoke this protection if it forms the view that the likely public benefit would not outweigh the likely public detriment.
See: s93 of the CCA
In 2005, Nestlé Australia notified the ACCC of its intention to refuse supply of Nestlé's leading Nescafé Blend 43 product (and other Nestlé Australia products) if ALDI Supermarkets did not agree to put a label on imported Nescafé products stating that they were not blended for Australian tastes. The ACCC revoked the immunity.
The anti-competitive harm caused by this conduct was considerable. Nestlé's conduct would discourage other retailers from sourcing the cheaper, imported product. It would also make it more difficult for ALDI to compete against the larger supermarkets. The public benefits brought about by the proposed labelling were minimal as ALDI's marketing efforts already made it clear that the imported product was different to Nestlé's Nescafé Blend 43 brand.