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Exclusionary Provisions (Boycotts) | Overview

 

Prohibition of exclusionary provisions in Australia

Exclusionary provisions (boycotts) between competitors are prohibited per se by section 45 of the Act, and are defined in section 4D. This operates in addition to the cartel conduct provisions which might also capture many forms of exclusionary provisions caught by the definition in s 4D.

Section 45 prohibits making or entering into an agreement containing an exclusionary provision; 'exclusionary provision' is defined in section 4D.

Section 4D defines exclusionary provisions as occurring when parties (two ore more of whom are in competition) make a contract, arrangement or understanding in which the relevant provision has the purpose of 'preventing, restricting or limiting'

'(i)    the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons; or

(ii)   the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons in particular circumstances or on particular conditions'

by all or any of the parties.

It is a defence to the exclusionary provision prohibition to demonstrate that the provision was entered into for the purpose of a joint venture and it does not have the purpose, effect or likely effect of substantially lessening competition (s 76C).

Certain secondary boycotts are also prohibited (sections 45D-45DD).

Note: The Harper Review Final Report has recommended that the separate prohibition of exclusionary provisions contained in s 45 be repealed.

 

The relevant legislation

The core prohibitions

Section 45 states (in part):

(2) A corporation shall not:

(a) make a contract or arrangement, or arrive at an understanding, if:

(i) the proposed contract, arrangement or understanding contains an exclusionary provision; or

...

(b) give effect to a provision of a contract, arrangement or understanding, whether the contract or arrangement was made, or the understanding was arrived at, before or after the commencement of this section, if that provision:

(i) is an exclusionary provision; or

Exclusionary provision

Exclusionary provision is defined in s 4D.

(1) A provision of a contract, arrangement or understanding, or of a proposed contract, arrangement or understanding, shall be taken to be an exclusionary provision for the purposes of this Act if:

(a) the contract or arrangement was made, or the understanding was arrived at, or the proposed contract or arrangement is to be made, or the proposed understanding is to be arrived at, between persons any 2 or more of whom are competitive with each other; and

(b) the provision has the purpose of preventing, restricting or limiting:

(i) the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons; or

(ii) the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons in particular circumstances or on particular conditions;

by all or any of the parties to the contract, arrangement or understanding or of the proposed parties to the proposed contract, arrangement or understanding or, if a party or proposed party is a body corporate, by a body corporate that is related to the body corporate.

(2) A person shall be deemed to be competitive with another person for the purposes of subsection (1) if, and only if, the first-mentioned person or a body corporate that is related to that person is, or is likely to be, or, but for the provision of any contract, arrangement or understanding or of any proposed contract, arrangement or understanding, would be, or would be likely to be, in competition with the other person, or with a body corporate that is related to the other person, in relation to the supply or acquisition of all or any of the goods or services to which the relevant provision of the contract, arrangement or understanding or of the proposed contract, arrangement or understanding relates.

 

Exceptions and anti-overlap

There are a number of exceptions to Part IV, including the cartel provisions.

The general Part IV exceptions are contained in section 51.

 

Authorisation

Parties may seek authorisation (on public benefit grounds) for proposed boycotts.

 

The history and future of the provision

History

Details forthcoming

Future

The current Harper Review Final Report has recommended that the prohibition on exclusionary provisions currently contained in s 45 be repealed.

 

Penalties and remedies for contravention

Application may be made to the Federal Court for the following:

  • Injunction (section 80)
  • Pecuniary penalties for breach (section 76)
  • Divestiture (section 81)
  • Damages (by persons who suffer loss and damage as a result) (six year limitation period) (section 82)
  • Disqualification from directorship (section 86E)
  • Non-punitive orders (such as community service order) (section 86C)
  • Other orders (Court may make 'such orders as it thinks appropriate' (section 87)

View remedies page for more details.

 

Case law

Details about the key cases relating to anti-competitive agreements in Australia can be found on my separate cases page.

 

Commentary

For research and commentary on cartel law in Australia see the reading room.