Market Conduct Rules
Part VI of the ICCC Act is also referred to as the Market Conduct Rules (MCR). MRCs are defined forms of various commercial conduct that has anti-competitive purpose and/or effect in the market; and which are prohibited by the ICCC Act.
In broad terms, the market conduct rules include the following:
- Anti-Competitive Arrangements, s.50
S.50 of the ICCC Act prohibits contracts, arrangements or understandings that have the purpose, or have or is likely to have the effect, of substantially lessening competition in a market. That prohibition applies both to entering into such contracts, arrangements or reaching understandings and giving effect to a provision of such a contract, arrangement or understanding that has already been made or reached. It is a broad provision and applies to both horizontal (agreements between competitors) and vertical (agreements between persons in different supply chain) agreements.
Any contract, arrangement or understandings entered into before 2003 are not enforceable.
- Anti-Competitive Covenants, s.51
Covenants over land that have the purpose, or have or are likely to have the effect, of substantially lessening competition in a market are prohibited by s.50 of the ICCC Act. The prohibition extends to requiring someone to give a covenant, giving one yourself or seeking to enforce the covenant.
- Exclusionary Provisions, s.52
S.52 prohibits exclusionary provisions which are also known as primary boycotts. This relates to provision of a contract, arrangement or understanding between two or more competitors that will prevent or limit their dealings with a particular person or class of persons, where the person who is the target of the boycott is a competitor of one or both of those who agree not to deal with him. This is a per se offence under the ICCC Act; but the defence is prove of no substantial lessening of competition.
- Price fixing, s.53
S.53 prohibits entering into and giving effect of contracts, arrangements or understandings between competitors to fix price. It is defined broadly to include contracts, arrangements or understandings that have the purpose or effect or likely effect of fixing, controlling or maintaining the price for goods or services or any discount, allowance, rebate or credit. It is also a per se to enter into and give effect to price fixing agreements because they are deemed to have the purpose, effect or likely effect of substantially lessening competition. There are however, some exceptions to price fixing prohibition.
- Taking Advantage of Market Power, s.58
The prohibition of such anti-competitive market behaviour may apply in a case where a person or company has a substantial degree of power in a market. Having market power or monopoly is not prohibited.
The ICCC Act prohibits the act of taking advantage of that power in an anti-competitive manner to;
- restrict the entry of a person into that or any other market, or
- prevent or deter a person from engaging in competitive conduct in that or any other market; or
- eliminate a person from, that market or any other market.
- Resale Price Maintenance, ss.59 and 60
Resale price maintenance, the practice of a supplier requiring a person not to sell its products below a certain price, is also prohibited. Thus, a supplier cannot insist or use treat or by any means, require that the supplied products are not sold below a certain price specified by the supplier. Resale price maintenance would also apply where a manufacturer threatens to refuse to supply a retailer who was discounting the manufacturer's products while others were not. The supplier is also not allowed to induce or attempt to induce to a person not sell the supplied products below a specified price.
A price recommendation is allowed under s.61 of the ICCC Act. However, it should be clearly marked that the price is only a recommended price.
- Business Acquisitions, s.69
The acquisition of assets or shares of a business that would have, or would likely to have the effect of substantially lessening competition in a market are prohibited by the ICCC Act.