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RESTRICTIVE TRADE PRACTICES BY BUSINESSES
The Market Conduct Rules under the ICCC Act prohibits behaviour that restricts competition in the market.
As with business mergers and acquisition, the ICCC Act allows for certain market conducts and arrangements which may be detrimental to be authorised on public benefit grounds.
The role of authorisation of restrictive trade practices (s.70) is to enable proposed conduct that would otherwise be in breach of the Market Conduct Rules to be exempted. The basis for this exemption is that the conduct creates sufficient public benefits that it is desirable, even though it may also give rise to some anti- competitive effects.
The ICCC Act provides for authorisation (exemption) for the following conduct under Section 70(1) – (8) of the Act:
- Agreements that substantially lessen competition (s.50)
- Covenants that substantially lessen competition (s.51)
- Price Fixing agreements that are deemed to lessen competition(s.53)
- Boycott (exclusionary provisions). (s.52)
- Resale price maintenance. (s.59 and s.60)
The ICCC Act requires persons/businesses wishing to enter into any such conduct which would substantially lessen competition to apply to the Commission for an authorisation. Businesses are encouraged to approach the ICCC for guidance, on an informal basis, as soon as there is a real likelihood that a potential anticompetitive would be entered into, and this should be done well before the completion of an acquisition.
A formal approval by the ICCC would provide legal certainly to parties to an arrangement to proceed with their plans without risking a contravention of the ICCC Act.