The Law
Exclusive Dealing (forcing)
About exclusive dealing
Section 47 of the CCA prohibits various forms of exclusive dealing. Broadly, it captures two types of anti-competitive vertical transactions:
(1) the conditional supply (or acquisition) of goods or services (conditions may relate to the ability to re-supply, exclusivity, limits on ability to acquire from competitors etc)
(2) refusing to supply for specified reasons (eg, because purchaser refuses to agree to a conditional supply).
Most forms of exclusive dealing (including full line forcing) are captured only if it can be demonstrated that they substantially lessen competition (s 47(10)). However, third line forcing is captured regardless of its anti-competitive effect.
Specific conduct captured includes:
(1) Supplying on condition as to acquisition or re-supply (s 47(2)). This captures various forms of full line forcing. Thus, for example, it is exclusive dealing to supply goods or services on the condition that the recipient will not (or will not except to a limited extent) acquire goods or services directly or indirectly from a competitor. It also captures supplying on conditions as to re-supply - including customer and territorial restrictions (eg, supplying on condition that the acquirer will not re-supply to particular person or in particular places)
(2) Refusing to deal because a customer will not agree to the kind of restriction mentioned above: s 47(3).
(3) Acquisitions restrictions (same as above but in reverse): ss 47(4) and 47(5).
(4) Exclusive dealing in relation to leases and licences: ss 47(8) and 47(9).
Third line forcing
Sections 47(6) and 47(7) prohibit third line forcing. This conduct, where established, is prohibited whether or not it can be demonstrated to have an anti-competitive effect. Essentially, third line forcing captures the supply of goods or services on condition that the customer acquire other goods or services froma third party (or refusing to supply because the customer will not agree to such an acquisition).
Notification
Recognising potential benefits associated with exclusive dealing, a system of notification and authorisation is available. Authorisation may be provided on public benefit grounds. More commonly, parties will notify the ACCC of conduct that might fall within the various definitions of exclusive dealing and, while the notification stands, they will not be held in breach of s 47 (see s 47(10A)) The ACCC can only remove the notification if they consider the conduct substantially lessens competition and that there are no benefits to the public that would outweigh the anti-competitive detriment.
The law - key provisions
Section 93 - Notification of Exclusive Dealing
Cases relating to exclusive dealing
Stationers Supply Pty Ltd v Victorian Authorised Newsagents Associated Ltd (1993) 44 FCR 35
Purpose of substantially lessening competition; exclusive dealing
Visy Paper Pty Ltd v ACCC [2003] HCA 59
Exclusionary provisions; exclusive dealing; anti-overlap
Articles relating to exclusive dealing
Australia-specific
See reading room
Policy generally
Reports relating to exclusive dealing
Dawson Report 2003
Chapter 8 relating to per se prohibitions and including recommendations for the removal of the per se prohibition against third line forcing.
Guidelines
Exclusive Dealing Notification Process - The Basics (ACCC 2007)
Useful links
Forthcoming