BBA LAW 301: Restrictive Trade Practices and the Competition Act

This report provides an in-depth analysis of restrictive trade practices under the Competition and Consumer Act 2010 (CCA) in Australia. It outlines the purpose of the CCA, the constitutional basis for the Commonwealth's power to legislate in this area, and the administrative body overseeing the Act, the ACCC. The report details the major focus of Part IV of the CCA, which addresses restrictive trade practices such as cartel conduct, anti-competitive agreements, misuse of market power, exclusive dealing, resale price maintenance, and mergers. Each of these practices is explained with reference to specific sections of the CCA and relevant case law. The report also discusses the penalties and remedies applied for breaches of these regulations, including pecuniary penalties, damages, injunctions, and divestiture. Finally, it critically analyzes why businesses engage in restrictive trade practices to increase profits and control markets, and why the government legislates against these practices to promote competition, protect consumers, and ensure fair trading.

Running Head: BUSINESS LAW
Business Law
Name of the Student:
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Author Note

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1. Outline the purpose of the Competition and Consumer Act 2010 (the CCA).
The legislation has been enacted by the commonwealth government for the purpose of
governing primary sectors of the market place, the relationship between consumers, retailers,
wholesalers and suppliers. The purpose of the legislation is the improve and enhance the welfare
of the Australian community through the promotion of competition and fair trading as well as the
provisions in relation to consumer protection. The legislation mainly covers unfair market
practices, industry codes, price monitoring, industry codes, product safety and labelling, mergers
and acquisition and industrial regulations such as electric, Airports, Telecommunications and
Gas (LEGISLATION, 2018).
2. What section of the Australian Constitution empowers the Commonwealth Government
to make these laws? Do the laws only apply to corporations? What effect does the
Competition Code have? What administrative body oversees the Act?
The commonwealth is provided powers to make laws in relation to the marketplace under the
provisions of Section 51 (XX) of the Constitution of Commonwealth Australia. No the laws are
applicable not only on corporations but also on any person indulging in business practices in
Australia. The code makes any restrictive trade practices illegal in the country and also provides
specific protection the consumers in the market place which is dominated by suppliers and
manufactures. The body which oversees the act is known as the Australian Competition and
Consumer Commission (ACCC) (Competition and Consumer Act 2010, 2018).
3. The major focus of Part IV of the CCA is restrictive trade practices. Explain this term.

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The antitrust or restrictive trade provisions provided through part IV of the CCA have the
purpose of addressing the restriction of those practices which anti competitive in nature and are
put in place by the business in order to minimise or prevent free competition. Restrictive trade
practices include practices like boycott agreements, price fixing, misusing market power,
excusive dealings, resale price maintenance and mergers and acquisitions. These practices are
put into place by the businesses to ensure that Monopoly is established and their bargaining
power in the market is increased and they can make additional practices (Australian Competition
Law | Overview, 2018).
4. There are six main types of restrictive trade practices which are prohibited. Explain
each of these by referring to the specific section of the CCA and by using appropriate
specific cases.
There are six primary types of respective trade practices which are in place as provided under
part IV of the CCA. These are as follows:
Cartel Conduct
Division 1 of Part IV of the Competition and Consumer Act 2010 (CCA) imposes prohibition
upon cartel conduct. Cartel conduct is not only a civil penalty provision but also can be
considered as a criminal offence. There are primarily four activities which are included in Cartel
conduct which are defined under section 45AD of the CCA. These activities are that of Price
Fixing, Market division, bid rigging and Restricting outputs. The activity is made illegal in
situation where it is provided effect in an understanding, arrangement or contract and the parties

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who are involved in the situation are competitors. When it comes to price fixing the terms have
to have the intention or effect of price fixing. On the other hand when it comes to other forms of
conduct only a requisite purpose is required by the provisions. A person can be imposed with a
criminal penalty which may extend up to $420,000 for every offence as well as a 110 year
imprisonment period where the commission of a cartel offence has been identified. The civil
penalties in relation to such conduct are same as which are available for any other contravention
under part IV.
In the case of ACCC v April International Marketing Services Australia Pty Ltd (No 8) [2011]
FCA 153 the ACCC was able to prove before the court that the defendant organization had been
involved in prace fixing. Price fixing is a process through which two or more competitors fix the
price of a certain product to be supplied to the consumer at a specific rate which is usual higher
than the market price in order to gain more profit and exploit the consumers. In this case Asia
Pulp & Paper Company Ltd (Singapore) and PT Indah Kiat Pulp and Paper Tbk (Indonesia) had
been found to have indulged in the process of prince fixing by fixing the price of uncoated
woodfree folio to be supplied to customers in Australia.
The federal court imposed fine of $14.5 million against organizations such as Schneider Electric
(Aust), Wilson Transformers, Alstom Australia and AW Tyree for indulging in market sharing
by creation of a Power Transformers Cartel. In addition an $8 million plus penalty has been
imposed on cartel members in relation to bid rigging in Australia by the federal court in an action
brought against them by the ACCC. In addition the ACCC in the case of ACCC v The
Tasmanian Salmonid Growers Association Ltd [2003] FCA 788 brought an action against the
defendant company for the purpose of indulging in Restricting outputs and was successful for the
same. Outputs are restricted for the purpose of increasing the demand of the products by

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restricting the supply and thus brining an increase in the price (Cartels case studies & legal cases,
2018).
Anti-competitive agreements and concerted practices
Through section 45 of the CCA it is expressly prohibited for a person to indulge in a conduct
which is making or providing effects to contract arrangement or understandings in relation to a
provision purporting to substantially reduce competition. These arrangements primarily have a
horizontal nature, however it is not a requirement of section 45. Thus any concerted practice
which substantially reduces competition or lessens competition is prohibited through the CCA.
Misuse of Market Power
A corporation under the provisions of section 46(1) of the CCA having substantial market power
is restricted form indulging in an activity which does or may likely substantially reduce
competition. The effects test in relation to the section had been initiated from November 2017.
The amendment had been made following the case of ACCC v Pfizer Australia Pty Ltd [2015]
FCA 113 where the court ruled against the ACCC due to the meaning of the section.
Exclusive dealing
Section 47 of the CCA provides rules in relation to prohibition of different forms of exclusive
dealing and specifically two types of anti-competitive vertical transactions. These are conditional
supply of goods and services and refusing to supply goods and services for a particular reason.
Exclusive dealings are only subject to liability where they are done to substantially lessen
competition. One of the primary cases in relation to the issue is the case of ACCC v AMA(WA)
[2003] FCA 686.

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Resale Price Maintenance
Section 48 of the CCA operates in relation to prohibiting a company from indulging in an
activity relating to resale price maintenance.
Mergers
Mergers in Australia are not prohibited unless it can be established that they are or will likely
reduce the competition in the market as per section 50 of the CCA. A primary case in relation to
the issue in Australia is the case of ACCC v Australian Competition Tribunal [2017] FCAFC
150.
5. What penalties/ remedies are applied if the restrictive trade practices regulations are
breached?
As provided in the CCA the following penalties are applicable for the breach of restrictive trade
practices under party IV.
(1) Pecuniary penalties under section 76 which is for corporations $10 000 000 and three
times the value when the court can identify "reasonably attributable" benefit obtained and
if not than annual turnover in preceding 12 months. On the other hand penalties for
individuals are $500000.
(2) Damages under section 82
(3) Injunctions under section 80]
(4) Divestiture under section 81 for mergers
(5) Non punitive penalties such as community services under section 86C
(6) Punitive order like adverse publicity ordered under section 86D

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(7) Disqualification from directorship under section 86E (Fines & penalties, 2018).
6. In your report ensure you critically analyse why businesses engage in restrictive trade
practices and why the government legislates against these practices.
Restrictive trade practices include practices like boycott agreements, price fixing, misusing
market power, excusive dealings, resale price maintenance and mergers and acquisitions. These
practices are out in place for the purpose of gaining additional profits by the business and
exploiting the consumers. The practice of price fixing is done so that the consumers have to pay
high price for certain goods. Market power is misused to not let other small companies enter the
market. Mergers are also done to prevent competition in the market. Thus the primary purpose
which businesses have in relation to indulging restrictive trade practices is that to make profit in
a short time through their power to manipulate the market. It has been discussed above that the
purpose of the legislation is the improve and enhance the welfare of the Australian community
through the promotion of competition and fair trading as well as the provisions in relation to
consumer protection. Thus it is clear that the primary purpose why the government legislates
against such practices is that corporations do not take control over the market place and the rule
of law is maintained. The purpose is also to ensure that small business may emerge in the market
and the consumers are protected against exploitation against illegal business practices.

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References
ACCC v AMA(WA) [2003] FCA 686.
ACCC v April International Marketing Services Australia Pty Ltd (No 8) [2011] FCA 153
ACCC v Australian Competition Tribunal [2017] FCAFC 150.
ACCC v Pfizer Australia Pty Ltd [2015] FCA 113
ACCC v The Tasmanian Salmonid Growers Association Ltd [2003] FCA 788
Australian Competition Law | Overview. (2018). Australiancompetitionlaw.org. Retrieved 28
March 2018, from http://www.australiancompetitionlaw.org/overview.html
Cartels case studies & legal cases. (2018). Australian Competition and Consumer Commission.
Retrieved 28 March 2018, from https://www.accc.gov.au/business/anti-competitive-
behaviour/cartels/cartels-case-studies-legal-cases#market-sharing
Competition and Consumer Act 2010. (2018). Legislation.gov.au. Retrieved 28 March 2018,
from https://www.legislation.gov.au/Details/C2017C00062
Fines & penalties. (2018). Australian Competition and Consumer Commission. Retrieved 28
March 2018, from https://www.accc.gov.au/business/business-rights-protections/fines-
penalties#restrictive-trade-practices
LEGISLATION. (2018). AUSTRALIAN COMPETITION AND CONSUMER COMMISSION.
RETRIEVED 28 MARCH 2018, FROM HTTPS://WWW.ACCC.GOV.AU/ABOUT-
US/AUSTRALIAN-COMPETITION-CONSUMER-COMMISSION/LEGISLATION