Competition and Consumer Law

Consumer Rights

Definition of Consumer

A ‘consumer’ is:

Someone who acquires goods for <$40,000
Someone who acquires goods for domestic or personal use
Motor vehicles

Consumer Goods

Consumer guarantees applying to goods include:

Are of acceptable quality – safe, have no faults and do what they are expected to do
Fit for purpose
Accurately described
Have spares available for a reasonable period of time

Consumer guarantees applying to services include:

Provided with due care and skill
Fit for purpose
Provided within a reasonable time

Safety

Also sets out rules for liability for safety defects

Business Rights

Unfair Contract Terms

Unfair contract terms are those which:

Create imbalance between the parties
Not necessary to protect reasonable interests and
Causes detriment to a party

Unconscionable conduct

Harsh or oppressive

Advertising

Misleading and Deceptive Conduct

Businesses should not make statements which are false or inaccurate – need to be capable of substantiation

Puffery is not considered misleading

Pricing

Price-fixing is prohibited under cartel conduct and prevents businesses colluding to set prices.

Anti-competitive Conduct

“Competition” is not a defined term in the Act, but generally requires that a market reflects the forces of supply and demand.

Whether parties compete depends on the market.
“Market” is defined by the Act to mean a market where goods/services are substitutable for or otherwise competitive with each other.
Substitution means there is cross-elasticity of demand and supply (how a good’s price changes in response to that of other goods). It is determined by:

Product
Geography
Functional level
Time

Competitors are Suppliers which supply to Customers in the same market, but may also be Suppliers and Customers to each other.

Types of Anti-competitive Conduct

Per se

Regarded as intrinsically anti-competitive, regardless of actual effect.

Substantially lessening competition

Conduct which has the purpose of or is likely to have the effect of substantially lessening competition

Involves a comparison of market competition with and without the conduct proceeding
“Purpose” depends on subjective intention and “likely effect” on the possibility

Horizontal Arrangements
Cartel Conduct	Price Fixing – parties collude to maintain the price, however there may be legitimate reasons businesses set prices close to each other without colluding Bid Rigging – parties collude to influence bid prices Output Restriction – parties collude to restrict production and reduce supply, in order to inflate prices Market Allocation – divide customers, suppliers or territory
Vertical Arrangements
Exclusive Dealing	Supplying goods or services on the condition that the person doesn’t deal with another supplier, and this substantially lessens competition in the market
Third Line Forcing	Supplying goods or services on the condition that the consumer also purchases another party’s products, and this substantially lessens competition in the market
Resale Price Maintenance	Supplier enforces a minimum price at which retailers can resell the products However, it is not illegal to withdraw supply of goods to prevent loss-leader pricing (selling below market cost to stimulate other goods) Predatory pricing (cutting prices to drive competitors out) may or may not be illegal depending on circumstances
Collective Bargaining	Businesses agree to negotiate together with supplier or customer. However, ACCC can provide exemptions where this is in the public interest e.g. small businesses negotiating with big players
Catch-all Provisions
s45	Conduct not captured by a specific provision, which has the purpose or likely effect of substantially lessening competition. Intended to cover informal communications and cooperation with competitors.
Unilateral Conduct
Misuse of Market Power	Restriction on a party holding “substantial market power” from engaging in conduct which has the purpose or likely effect of substantially lessening competition Substantial market power – not restrained by competition, due to not having competitors in geographical or other area, no close substitutes.

Mergers

Mergers are prohibited which have the effect or would be likely to have the effect of substantially lessening competition