Tertiary education program

Prohibited conduct

There are two types of exclusive dealing:

  1. full line forcing and
  2. third line forcing.

A corporation is prohibited from engaging in either type of exclusive dealing if the conduct has the purpose, effect or likely effect of substantially lessening competition (that is, it is anti-competitive).

Full line forcing occurs when a business:

  • supplies or offers to supply goods or services on conditions that restrict the customer's ability to deal with others, or
  • acquires or offers to acquire goods or services on conditions that restrict the supplier's ability to deal with others.

Third line forcing, happens when a business only supplies goods or services, or give a particular price or discount, if the purchaser buys goods or services from a particular third party.

You should note that third line forcing only relates to the supply of goods or services, not the acquisition of good and services.

Case study

Baxter Healthcare was the only Australian manufacturer of sterile fluids and faced little competition from importers. Baxter offered a large discount on sterile fluids to hospitals that agreed to also buy most of their dialysis fluids from Baxter (there were several other businesses that supplied dialysis fluids to Australia). This conditional offer was found to substantially lessen competition in the dialysis fluids market as it made it unlikely that hospitals would deal with other suppliers of these fluids.

See: ACCC v Baxter Healthcare Pty Limited [2007] HCA 38