The Competition and Consumer Act 2010 prohibits a business from engaging with one or more persons in a concerted practice that has the purpose, or is likely to have the effect of substantially lessening competition in a market in Australia. To be a breach of the Act at least one of the persons engaging in a concerted practice must be a corporation and at least 2 of the persons must be separate entities.
Parties to a concerted practice which has the purpose, effect or likely effect of substantially lessening competition will often be competitors. However, depending on their involvement, other parties such as suppliers, distributors and professional associations may engage in a concerted practice.
It is not possible to list all the circumstances in which a concerted practice may occur. However, a business is particularly at risk of engaging in a concerted practice with the purpose, effect or likely effect of substantially lessening competition if it replaces or reduces competitive, independent decision making with cooperation with its competitors. For example, a concerted practice may involve communicating and exchanging strategic commercial information such as:
- how the business determines the price of its products
- where the business sells its products
- to whom the business sells its products
- whether the business bids for a tender and/or the terms of a tender; or
- the quantity of the product the business offers or produces.
The circumstances in which the concerted practice occurs may be important in assessing whether the practice has the purpose of substantially lessening competition. For example, a concerted practice would be more likely to be found to have the purpose of harming competition where commercially sensitive information is exchanged between competitors and where the recipient acts, or intends to act on that information.