On 18 October 2017, the Government passed the Competition and Consumer Amendment (Competition Policy Review) Bill 2017 (the Bill). The Bill will make several amendments to the Competition and Consumer Act 2010 (the Act), with the most significant change being to third line forcing.
Amendment
The current law provides that third line forcing is per se prohibited, meaning that it is prohibited no matter what its effect on competition. Under the Bill, third line forcing will only be prohibited where it has the purpose, effect or likely effect of substantially lessening competition. The Bill will also no longer require a party who intends to engage in third-line forcing to notify the ACCC.
What is Third Line Forcing?
Third line forcing occurs where a business will only supply goods or services, or give a certain price or discount on the condition that the purchaser buy goods or services from a particular third party. The refusal to supply the goods or services without the parties agreeing to the above condition also constitutes third line forcing. An example of third line forcing may be where a sale of business is conditional on the purchaser obtaining the required finance from a financial institution specified by the other party.
Substantially Lessening Competition
When looking at whether conduct has the purpose, effect or likely effect of substantially lessening competition, one must look at the conduct that has already occurred as well as the proposed conduct.
In assessing the conduct that has already occurred, one should apply the ‘Dandy Power Test’ which was established by Smithers J in Dandy Power Equipment Pty Ltd v Mercury Marine Pty Ltd [1982] FCA 178. Smithers J stated that you must look at the “relevant significant portion of the market… and ask how and to what extent there would have been competition therein but for the conduct, assess what is left and determine whether what has been lost in relation to what would have been, is seen to be a substantial lessening of competition.
In assessing whether the proposed conduct has the purpose, effect or likely effect of substantially lessening competition, one must consider the state of the future market both with and without the conduct occurring.
Other Amendments
In addition to the above amendments, other significant amendments will include:
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Including goods that are imported or capable of being imported or services that are rendered or capable of being rendered in Australia into the definition of ‘competition’;
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increasing the maximum penalty for breaches of the secondary boycott provisions; and
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permitting a corporation or person to notify the ACCC of conduct relating to resale price maintenance.
Although the amendments are not yet in force, the ACCC expects that this may occur within the next few weeks. The ACCC has also established a Substantial Lessening of Competition Unit which will release guidance on the new provisions and aid with compliance of the new laws.
For further information on the amendments or how they will impact your business, please contact Alex Martin on 9481 2000 or alex@tauruslawyers.com.au.
