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Cartel Provisions and Liability under Competition and Consumer Act

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Added on  2023/06/11

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This article discusses the legal implications of cartel provisions and liability under the Competition and Consumer Act. It covers the definition of cartel provisions, joint ventures, personal liability, and ways to avoid liability and penalties. The article also cites relevant case laws and references.

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Question one
The issue in question is if 'one-off' private sale of land by a person who does not commonly sells
properties and is not a real estate agent, can be considered as a transaction that has taken place in
context of 'trade or commerce' as needed under ACL.
In context of misleading or deceptive conduct that has been described in section 18 of the ACL,
it has been provided that in trade/commerce, an individual ought not to be caught up in conduct
that is misleading/deceptive. This question recently came before the court in Williams v Pisano1.
In this case, a property was traded for $3.35 million by Mr. and Mrs. Pisano and the buyers were
Mr. Williams and his wife. Soon after, the buyer had moved into the property, problems started
to emerge. Similarly, there was a major water penetration into the property after the rainy
weather. Under these circumstances, the buyers decided to sue the seller for a breach of s18.
ACL It has been provided by this section that a person should not, in trade or commerce, be
involved in conduct that can be described as misleading or may mislead or deceive.
It was accepted by the seller is that representations made regarding the quality and standard of
renovation can be described as misleading or deceptive. However, it was argued by the seller that
the conduct had not taken place in context of 'trade or commerce'. As a result, the buyer cannot
be held entitled for the protection provided by s18, ACL.2 It was not accepted by the court of
first instances, the Supreme Court of NSW. This Court stated that the sellers were accountable
under s18, ACL. An appeal was made by the sellers. The Court of Appeal approved the
1 Williams v Pisano [2015] NSWCA 117
2 Barrick v Qantas Flight Catering Ltd (2007) 163 IR 207

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submissions made by the sellers. Therefore, this Court stated that the conduct of the sellers had
not taken place in context of trade or commerce. As a result, the protection provided was if
anything was not available to the buyers and the buyer cannot succeed under section 18.
In this context, the court stated that under general conditions, a person selling his home, through
private treaty or auction or if such person conducts personal negotiations or with the help of a
real estate agent, and cannot be considered to have undertaken these activities in trade or
commerce or in context of commerce.3 Regardless of the fact that an estate agent has been used
or, if the agent had advertised the house, by arranging advertisements and brochures, or if the
agent had sold the property by auction or if merely by negotiations, generally the sale will be a
sale by the seller of the dwelling and not a transaction that has taken place in context of business.
Regarding the ACL, the requirement of 'trade or commerce' is fulfilled by the actions that have
taken place in commercial setting as compared to private setting. For example, it can be the
private sale that has taken place between the parties who are generally not in the business of
selling that particular thing.4 Other matters that need to be considered in this regard are the
director of the parties involved, the motivation behind the transaction and the role of the relevant
person in the transaction for the purpose of deciding this issue.5
The sale of residential property generally takes place between a private individual who had lived
in the home for some time span and a personal purchaser, who also means to live in the house for
some duration.6 Under these circumstances, it cannot be stated that the buyer or the seller had
3 Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594
4 Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389
5 Australian Competition and Consumer Commission v Lux Distributors Pty Ltd (2013) FCAFC
90
6 Wilson, D., 2014, ‘Consumer Information’ in Kate Tokeley (ed), Consumer Law in New
Zealand LexisNexis, 128
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entered the sale in order to advance a commercial purpose or business. Therefore, such sales are
generally not considered as the transactions that have taken place in 'trade or commerce'.
On the other hand, the situation would be diverse if the property is being sold by a developer as a
part of the development. In this case, the fact that the same is being made, while advancing the
business of the developer makes such sale A transaction that has occurred in ‘trade or
commerce'.
After going through the above mentioned the discussion, and also the relevant case law,. It can
be stated that generally of 'one off' private sale by a person who is not a real estate agent and
does not commonly sells properties, cannot be considered as having taken place in context of
trade or commerce as required by the Australian consumer Law. The same can also be stated in
case of private sale of a business, a good or a sale that has taken place on the Internet.
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Question two
1. It is possible for businesses to work together instead of competing against each other. The
purpose behind such agreements is to increase profits at the same time, make the consumers feel
that the businesses are still in competition. In this way, businesses can be described in cartel is
they have control over the market and drive out the companies that cannot compete. The result of
the illusion of competition is that genuine innovation is stiffeled and inefficiently operating
businesses cannot be identified. In this context, the Competition and Consumer Act, 2010 (CCA)
has prohibited cartels under the civil law and also as a criminal offense. As a result, businesses
are prohibited by the CCA from entering an agreement which carries a cartel provision.
According to section 44ZZRA, CCA, a cartel provision can be described as relating to any of the
conduct mentioned below. It includes price-fixing, allocating customers, suppliers or territories,
output restrictions and bid rigging. In this regard, it is worth mentioning that it is not necessary
that the agreement should be an agreement in writing. In such a case, merely a simple
understanding is sufficient if it becomes clear that independent decisions are not made by
businesses but on account of pre-decided tactics.
Therefore in this case it can be concluded that Lennon Music and Wilsun Guitars had breached
the cartel provisions of CCA.
2.
According to s457, any contract, understanding the arrangement between the parties that have the
effect of the purpose of significantly decreasing competition in the marketplace, even in such
actions does not fulfill the strict definition of other anti-competitive behavior like the cartels, has
7 Competition and Consumer Act, 2010

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been prohibited. In this regard, the factors that need to be considered by the court in order to
arrive at a decision include:-
If there is an agreement or concerted practice that is covered by the CCA;
What this market?
If the conduct significantly decreased competition in the market,
Other types of anticompetitive behavior
The relevant sections of CCA.
Therefore, under the Act, contracts, agreements, understandings and arrangements have the
similar meaning. Basically all of them include the progress of action plan between two or
additional parties. That cannot be enforced by the law, but the parties have every intent of
following it. In case of 'arrangement', the court stated in TPC v Nicholas8 that when each party
intentionally arouses an expectation in the others that such party is going to act in a particular
way, it appears that the party incurs at least a moral obligation for doing so. Similarly regarding
understanding, the court stated in Top Performance v Ira Berk,9 that an understanding involves a
meeting of two or additional minds.
In order to make an arrangement or to reach an understanding, it is not required that anything
should be presented in writing. In fact generally such agreements are not recorded in writing.
Sometimes, it is not even express and a 'wink or a nod' is enough. Therefore, if needed, the
courts can infer the necessary 'meeting of the minds' from the circumstantial evidence like the
evidence of similar pricing structures, joint action or even the evidence related with the
opportunities that are available to the parties for arriving at an understanding. In this context it is
8 TPC v Nicholas Enterprises Pty Ltd (No 2) (1979) FLR 83
9 Top Performance Motors Ltd v Ira Berk (Qld) Pty Ltd (1975) 24 FLR 286
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significant to consider what was said in Chile and what was understood to be positioned by each
party.
Therefore in the present case, both companies have breached section 45 of the CCA.
3.
In the present case, Murray and Lennon can be held personally liable for the breach of CCA. In
this regard, the law provides that an individual can be held personally liable for the violation of
CCA did the court is content that:-
The person was involved in conduct that amounts to a breach of CCA;
The person tried to involve in conduct amounting to the breach of CCA;
The person aided, abetted or passed to another person to violate the provisions of CCA;
The person induced or tried to induce another person, by using threats, promises or other
methods for breaching the CCA;
The person was directly/indirectly and intentionally involved in a breach of CCA by
someone else.
The person conspired with other persons for violating the provisions of CCA.
In view of these provisions, it can be stated that the nature and level of involvement that should
be present on part of an individual in the breach of CCA encompasses a wide range of conduct. It
ranges from merely knowing all the facts amounting to the breach of CCA to being the person
who involved in the breach of the CCA or has incited other persons to do so. Even trying to do
so is sufficient for pricing the liability of such a person. In this regard, it is not a defense that the
attempts made by the person in this regard, remained unsuccessful.
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4.
The way in which Wilsun Music and Lennon Music can avoid liability and penalty for their
conduct under the CCA, 2010 is to claim the defense of a joint venture. In case of civil penalty
proceedings, it has been provided by the CCA that sections 44ZZRJ and 44ZZRK are not
applicable in case of the contract, even if it carries a cartel provision if:-
The cartel condition has been included in the contract for the purpose of a joint venture; and
Such joint venture has been formed for production or supply of goods or services; and
In the case of this sub-para 4J(a)(i) is applicable to the joint venture, such joint venture has been
performed jointly by the parties to the contract and similarly the joint venture is carried on by a
body corporate that has been created by the parties to the contract with a view to enable the
parties to carry on the activity that has been mentioned in paragraph (b) jointly through (i) joint
control; or (ii) their ownership of shares in the capital of such body corporate.
In this way, it can be claimed in defense against the allegation of the breach of cartel provisions
of the CCA that the understanding or the arrangement cannot be described as a contract; and at
the time of making the arrangement or when the parties arrived at the understanding, it was the
intention of each party to such understanding or arrangement to be a contract and they

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reasonably believed that such understanding our arrangement was in fact, a contract and at the
same time the cartel provision is for the joint venture.
This is the way, Lennon music and Wilsun Guitars can avoid their liability and penalty under the
CCA.
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References
Wilson, D., 2014, ‘Consumer Information’ in Kate Tokeley (ed), Consumer Law in New Zealand
LexisNexis, 128
Case Law
Australian Competition and Consumer Commission v Lux Distributors Pty Ltd (2013) FCAFC
90
Barrick v Qantas Flight Catering Ltd (2007) 163 IR 207
Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594
Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389
Top Performance Motors Ltd v Ira Berk (Qld) Pty Ltd (1975) 24 FLR 286
TPC v Nicholas Enterprises Pty Ltd (No 2) (1979) FLR 83
Williams v Pisano [2015] NSWCA 117
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