The five core prohibitions
There are five core competition law prohibitions:
- misuse of market power: the use of substantial market power for anti-competitive purposes
- cartel conduct: anti-competitive agreements between competitors
- exclusive dealing: attaching anti-competitive terms or conditions to the supply or acquisition of goods or services
- resale price maintenance: requiring customers to sell goods or services at or above a specified minimum price
- anti-competitive mergers: an acquisition of one company by another that is likely to result in a substantial lessening of competition in the market that the companies operate in.
Outright prohibitions v anti-competitive test
There are two types of prohibitions in the CCA: outright prohibitions and conduct subject to an anti-competitive test.
Outright prohibitions apply to certain types of conduct which contravene the CCA without regard to whether or not that conduct is in fact harmful to competition in individual cases. The conduct is presumed to be harmful from its very nature and is therefore considered to be illegal without further enquiry about its impact on competition. An example of a per se prohibition is price fixing, which is a type of cartel conduct.
Other types of conduct are only prohibited by the CCA if they have a substantial impact on competition, i.e. the conduct has the purpose, effect or likely effect of substantially lessening competition. This means that to establish that a business has contravened the CCA, a two-stage process is engaged:
- In the first stage, it is necessary to show that the business has engaged in the conduct which is prohibited.
- In the second stage, it must be shown that the conduct engaged in has the proscribed anti-competitive purpose, effect or likely effect. An example of this type of conduct is supplying a customer with goods or services on the condition that the customer does not buy from the supplier's competitors, which is a form of exclusive dealing.