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Competition encourages all businesses to innovate and find ways to work more efficiently. However, some behaviour is so damaging to competition that it’s banned outright if it substantially lessens competition. These are known as anti-competitive behaviours.

Cartels

• Have you been approached by a competitor who wants to fix prices?
• Have you ever let your competitor win a tender on the condition that you win the next one?
• Do you think your suppliers have some sort of arrangement to restrict the amount of goods they will sell to their customers?

A cartel is an agreement between competing businesses about how they will or won't compete.

Cartels cheat consumers and other businesses. They restrict healthy economic growth, drive up prices and reduce innovation and investment.

It’s illegal for businesses to agree to act together in a cartel instead of competing. Cartel members risk heavy penalties and can be jailed.

An informal understanding can still amount to cartel conduct. Competing businesses verbally agreeing to fix prices over lunch or at a cocktail party will be just as guilty as if the agreement was in writing and made in a boardroom.

Types of cartel activity

There are 4 types of cartel activity:

• price fixing - when competitors agree on pricing instead of competing against each other
• market share - when competitors agree to divide a market between themselves, so they don’t have to compete
• control output - when competitors agree to limit the amount or type of goods and services available
• rig bids - when suppliers discuss and agree among themselves who should win a tender, and at what price.

Reporting cartels

If you think one of your suppliers or competitors is engaging in cartel conduct, you can report a cartel to us.

Learn more about cartel activity and how to protect your business.

Collective bargaining and collective boycotts

• Has another small business asked to work with you to negotiate a better deal from a larger supplier?
• Do you know the law about joining a group of other small businesses to boycott another business?
• Did you know that small businesses can get an exemption from the law to collectively bargain?

Collective bargaining happens when 2 or more competitors come together as a group to negotiate with a supplier or a customer over terms, conditions and prices. Negotiating as a group enables small businesses to combine their resources and bargaining power to get a better deal with larger businesses.

The groups may agree not to supply or buy from a business until they reach agreement on terms and conditions. This is called a collective boycott.

When competitors make these decisions jointly in a collective bargaining negotiation or a collective boycott, they risk breaking competition law.

However, collective bargaining can sometimes benefit both the participating businesses and, ultimately, consumers. Businesses that bargain collectively can:

• save time and money on negotiations
• have more influence over terms and conditions
• improve their efficiency.

An exemption to specific collective bargaining and collective boycotts that are in the public interest can be granted by the ÌÇÐÄÔ­´´. An exemption removes the risk of breaching competition law.

Exemptions for small business collective bargaining

Most collective bargaining by small business is covered by the collective bargaining class exemption. This means that small business collective bargaining arrangements don't need to be individually assessed.

Without some form of legal protection, this kind of joint bargaining would be at risk of breaching competition laws. This exemption allows eligible small businesses to negotiate with their customers or suppliers as a group, without risking a breach of competition laws.

This class exemption does not apply to collective boycotts. A different type of exemption is required from the ÌÇÐÄÔ­´´ for collective boycotts.

Learn more about:

• the process for small business to get an exemption for collective bargaining
• collective bargaining and the process for small business exemptions.

Concerted practices

• Are you aware of businesses exchanging competitively sensitive information?
• Do you know of competitors behaving in a cooperative manner?
• Have you been asked to provide information on your pricing or strategic business plans to a third party?

A concerted practice is a pattern of communication or cooperative behaviour between 2 or more businesses. It involves sharing strategic commercial information that goes beyond a business independently responding to market conditions.

Concerted practices are illegal if they have the purpose of or are likely to have the effect of substantially lessening competition.

A business is particularly at risk of engaging in a concerted practice if it replaces or reduces competitive, independent decision making with cooperation with its competitors.

Examples of concerted practice

A concerted practice may involve communicating and exchanging strategic commercial information such as:

• how the business determines the price of its products
• where the business sells its products
• to whom the business sells its products
• whether the business bids for a tender and/or the terms of a tender, or
• the quantity of the product the business offers or produces.

Learn more about concerted practices.

Exclusive dealing

• Do you supply goods to customers on the condition that they don't source goods from your competitors?
• Do your suppliers restrict who you can sell their products to or the price at which you can sell those products?

Exclusive dealing is where a business puts conditions on another business it deals with (such as their supplier or purchaser) that restricts their freedom to deal with others.

For example, a business may supply or offer to supply you with products or services on the condition that you:

• don't buy goods or services from their competitors
• don't supply goods or services to certain people or businesses, such as their competitors
• must buy goods or services from an unrelated business
• don't supply goods or services in certain areas.

This is illegal when it substantially lessens competition. Whether exclusive dealing is likely to substantially lessen competition will depend on a range of factors, including the number of alternative sources for those products or services.

Exclusive dealing is allowed when it doesn’t substantially lessen competition. 

Learn more about exclusive dealing.

Minimum resale prices

• Has a supplier ever asked you to sell your products at a set minimum price?
• Have you been told you can’t discount products by a supplier?

Businesses are free to set their own prices and discount their products or services as they see fit. However, it’s illegal for suppliers to attempt to set a minimum price for the resale of their products or services. This unfair behaviour is known as ‘resale price maintenance’.

Resale price maintenance only applies to a minimum price. In most cases, a supplier can specify a maximum retail price.

There is nothing wrong with a supplier providing a recommended retail price, as long as it’s only a recommendation. However, it would be illegal for a supplier to set a minimum resale price for their products by requiring a retail business to charge at least the RRP (or threatening to withdraw supply if the business doesn’t).

It's also illegal for a business to supply products on the condition that the business:

• sells those products at a certain specified price
• sells those products at a price determined by a formula set by the supplier, or
• doesn’t discount those products.

Learn more about minimum resale prices.

Misuse of market power

• Is a major supplier refusing to supply you with stock?
• Is the large retailer down the street selling their products at such low prices that you can't possibly compete with them?

You may deal with other businesses that have a substantial amount of market power. Businesses with market power have more freedom to act without needing to worry about the reactions of competitors, suppliers and customers. A business can obtain market power by ‘out competing’ rivals by being more innovative and offering better products or services.

However, it’s illegal for a business with a substantial degree of market power to engage in behaviours that can substantially lessen competition in a market. When this happens, it’s called a ‘misuse of market power’.

Some types of behaviours have greater potential to involve a misuse of market power and lessen competition, these include:

• refusals to deal
• restricting access to essential inputs
• predatory pricing
• loyalty rebates
• margin or price squeezes
• tying and bundling.

Learn more about misuse of market power.

Seeking an exemption from the law

Businesses wishing to engage in conduct that would or might be anti-competitive may be able seek an exemption for that conduct from the ÌÇÐÄÔ­´´ through its notification or authorisation processes.

With an exemption you may be able to engage in various conduct, including making arrangements between competitors, exclusive dealing and engaging in resale price maintenance, where the public benefits outweigh the detriments of such an arrangement.