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Businesses may be at risk under new
“concerted practices” legislation

by | Jul 24, 2018 | Automotive Law, Business Law, Pharmacy Law

On 6 November 2017, the Competition and Consumer Act 2010 (Cth) was amended to provide for the introduction of a new prohibition on “concerted practices”.  Prior to its commencement the Australian Competition and Consumer Commission (ACCC) lobbied the Commonwealth Government heavily for the introduction of the prohibition and businesses may assume that the ACCC will take an aggressive approach to the enforcement of this new law and bring cases before the courts.

According to the Explanatory Memorandum (EM) and the ACCC, the intention of the new provision is to capture a broader range of conduct than the previous cartel provisions. The cartel provisions currently apply to contracts, arrangements or understandings between competitors or likely competitors that involve (among other things) price fixing, market sharing, bid rigging or customer allocation. Under the new concerted practices prohibition there is no requirement for the same “meeting of the minds” between competitors that cartel conduct requires. Concerted practices are only prohibited if they have the purpose, effect or likely effect of substantially lessening competition in a market.

Whilst the legislation does not define a concerted practice, according to the EM a concerted practice is any form of cooperation between two or more firms (or people), or conduct that would be likely to establish such cooperation, where this conduct substitutes, or would be likely to substitute, cooperation in place of the uncertainty of competition. At the time of writing there has yet to be an Australian consideration as to what is a concerted practice.

The ACCC has also released interim guidelines that provide examples of conduct that could be at risk of being considered a concerted practice, including conduct in circumstances where a party “replaces or reduced competitive, independent decision making by cooperating with its competitors”. These may include such matters as:

  • Pricing decisions;
  • Location of sale of products;
  • To whom products will be sold;
  • The quantity of products that will be offered or produced; or
  • Whether a particular business will submit a bid for a tender and/or the terms of the submission.

What this means for business is:

Any interactions where there was previously a risk of cartel conduct arising, there is now a risk that the interaction may instead (or also) result in a concerted practice; and Interactions that do not give rise to a cartel risk, and that were previously thought to be innocuous, may nevertheless give rise to a concerted practises risk due to the potentially broader application of the new prohibition.

Forums such as industry conferences or certain interactions at meetings with franchise networks now carry a risk of being deemed a concerted practice.

Clinch Long Woodbridge helps businesses review multiple points in their dealings to ensure they do not breach the new laws.

If you’d like any help in complying with the new laws, please contact Eric Louca (elouca@clw.com.au) or Genevieve Hehir (ghehir@clw.com.au) on (02) 9279 4888.