Rhonda L. Smith

When Competition Is Not Enough: Consumer Protection

Rather than market structure, it is the nature of the goods and services and the cost of obtaining and processing information that may place consumers in a poor bargaining position. The article outlines the key provisions for consumer protection in Australia, Part V of the Trade Practices Act. It discusses search costs, and the factors that limit search, and explains how the conduct of suppliers (or others) may reduce search costs. Asymmetry of information is identified as a necessary (but not sufficient) condition for misleading consumers. When products are substandard or are used incorrectly, they may harm consumers or cause property damage and in some circumstances this may be best addressed via product liability laws. The article concludes by considering how firms or industries can be more pro-active in relation to consumer protection. Copyright 2000 by Blackwell Publishers Ltd/University of Adelaide and Flinders University of South Australia

The Australian Grocery Industry: A Competition Perspective

This article discusses whether at a theoretical level the large and growing role of the vertically integrated supermarket chains raises a buyer-power concern because of potential harm to other retailers, suppliers, and/or consumers. Even if this is possible, whether it is a real concern depends on whether provision exists to constrain the exercise of that power through market responses, such as entry, or through regulatory provisions, such as those contained in the Trade Practices Act.

Possible Implications of the Dawson Inquiry for the ACCC

The ACCCs role is to enforce the Trade Practices Act. This article critically assesses key recommendations for change contained in some of the major submissions to the Dawson Inquiry and their implications for the ACCC.

Representing Colin Firth or Mr Darcy: can competition law handle the reality of modern agents?

ABSTRACT Regulators and courts have struggled to apply competition law to agency arrangements. In particular, there has been a failure to understand that modern agents frequently provide a platform, offering both principals and their ultimate customers an efficient marketplace in which to meet. European law and recent developments in Australia reflect a tendency to require agents to mimic the characteristics of an employee or risk being treated as independent distributors. Such a binary approach, however, is anathema to the fundamental principle that the law be neutral in its treatment of different business models. While agency arrangements should not be exempted from the operation of competition law, the law must be applied in a manner consistent with the ultimate objectives of protecting the competitive process and ensuring efficient outcomes.

Playing Favourites: The Competition Effects of Preferred Customer Arrangements

Competition regulators appear to be paying increasing attention to the possibility that quite commonplace commercial arrangements between suppliers and their customers may have adverse implications for competition. The OECD, for example, has held two Best Practice Round Table sessions on loyalty schemes, including volume discounts, in recent years,1 and numerous articles on loyalty programmes and discounts have appeared in the literature.2 Two very common arrangements that confer apparent benefits upon a particular customer (or group of customers) are most favoured customer (MFC) clauses and meet the competition (MTC) offers. Generally, an MFC clause requires the seller to offer the buyer a price at least as low as the price offered by the seller to other buyers of the same, or substantially similar, product. An MTC offer ensures that the buyer is entitled to the best price available in the market, not just the best price offered by a particular supplier, even if the customer is contracted to that supplier. Various descriptors have been applied to these arrangements. For example, an MFC (or most favoured nation) clause may be described as a non-discrimination arrangement3 or even a prudent buyer clause, while an MTC clause may be described as a “meet or release” clause, a “price protection” clause or “competitor-based formula pricing” because the price is pegged to the

Auctions, Exclusive Contracts and Competition for the Market

An auction is a very common method of selling assets, especially where the seller is uncertain of the value of the asset to potential buyers. Both private and public sector businesses use auctions to select between alternative suppliers or acquirers. Generally, although there may be unique or exclusive aspects to a particular asset or contract, unsuccessful bidders are not excluded from the market, or at least not for any significant period, and in many instances multiple supply contracts are awarded or further contracts become available within a relatively short period. Generally speaking, a competition assessment of such agreements considers whether parties to the agreement will be sufficiently constrained by the remaining competition in the market. In some cases, however, a contract may be exclusive and co-extensive with the market. When this occurs unsuccessful bidders will be locked out of the market, at least for the duration of the contract. This may confer substantial market power on the single supplier/acquirer and so give rise to competition concerns. Such concerns may be assessed against a counterfactual that assumes the contract is non-exclusive, and so an important consideration will be the likely extent of competition that would exist in the market absent the contract. If the market is a natural monopoly then, irrespective of whether the supply contract is exclusive, there is unlikely to be competition in the market on an ongoing basis. Monopoly may also exist because of a government decision to allow only one supplier; or because switching between alternative suppliers is not possible after the initial contract is let, due to incumbency advantages associated with technological factors and/or underlying intellectual property rights (eg a lack of interoperability). In these circumstances, the counterfactual may not presuppose June 2007 European Competition Journal 163