Exclusive Dealing (forcing)

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).

All forms of exclusive dealing are now captured only if it can be demonstrated that they substantially lessen competition.

Specific conduct captured as exclusive dealing 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).

Sections 47(6) and 47(7) prohibit third line forcing. This conduct 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 from a third party (or refusing to supply because the customer will not agree to such an acquisition).

Recognising potential benefits associated with exclusive dealing, a system of notification and authorisation is available.

Authorisation may be provided on public benefit grounds (s 88).

More commonly, parties will notify the ACCC of conduct that might fall within the various definitions of exclusive dealing (s 93) 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 it is satisfied

• (for exclusive dealing other than third line forcing): the conduct has the purpose, effect, or likely effect of substantially lessening competition and it is not likely to result in a benefit to the public which would outweigh those anti-competitive effects (s 93(3)) (current cost is $2,500)
• (for third line forcing): the likely benefit to the public will not outweigh the likely detriment to the public arising from the proposed conduct (current cost of notification is $100)

Section 47 Exclusive dealing

Section 93 - Notification of Exclusive Dealing

Australian Association of Pathology Practices Incorporated [2004] ACompT4 (authorisation)

Australian Competition and Consumer Commission v Baxter Healthcare [2007] HCA 38 (29 August 2007)

ACCC v Bill Express Ltd (in liq) (2009) 180 FCR 105; [2009] FCA 1022
Third line forcing - including 2007 amendments

ACCC v IMB Group Pty Ltd (ACN 050 411 946) (in liq) [2002] FCA 402
Exclusive dealing (third line forcing)

ACCC v Link Solutions Pty Ltd (No 3) [2012] FCA 348

Application by Co-operative Bulk Handling Limited (No 3) [2013] ACompT 3
Appeal against revocation of exclusive dealing notification - public benefit v SLC

Castlemaine Tooheys Ltd v Williams & Hodgson Transport Pty Ltd [1986] HCA 72; (1986) 162 CLR 395 (2 December 1986)
Third line forcing

KAM Nominees Pty Ltd v Australian Guarantee Corporation Ltd (1994) 123 ALR 711

Re Ku-ring-gai Co-operative Building Society (No. 12) Ltd [1978] FCA 50; (1978) 36 FLR 134
Exclusive dealing (third line forcing)

Mark Lyons Pty Ltd v Bursill Sportsgear Pty Ltd (1987) 74 ALR 581

O'Brien Glass Industries Ltd v Cool & Sons Pty Ltd (1983) 77 FLR 441; (1983) 48 ALR 625

Outboard Marine Pty Ltd v Hecar Investments (No 6) Pty Ltd (1982) ATPR 40–327

The Paul Dainty Corporation Pty Ltd v The National Tennis Centre Trust [1990] FCA 163; (1990) 22 FCR 495 (LawCite)
Exclusive dealing (sub-sections 47(1), (8), (9) and (13))

Stationers Supply Pty Ltd v Victorian Authorised Newsagents Associated Ltd (1993) 44 FCR 35
Purpose of substantially lessening competition; exclusive dealing

SWB Family Credit Union Ltd v Parramatta Tourist Services Pty Ltd [1980] FCA 125; (1980) 48 FLR 445
Exclusive dealing (third line forcing)

Trade Practices Commission v Legion Cabs (Trading) Co-operative Society Ltd. [1978] FCA 47; (1978) 35 FLR 372
Exclusive dealing (third line forcing)

Universal Music Australia Pty Ltd v ACCC [2003] FCAFC 193

Visy Paper Pty Ltd v ACCC [2003] HCA 59
Exclusionary provisions; exclusive dealing; anti-overlap

Jefferson Parish Hospital District No 2 v Edwin Hyde 466 US 2 (1984)

See reading room

Jan Boone, Wieland Müller, Sigrid Suetens, 'Naked Exclusion: Towards a Behavioral Approach to Exclusive Dealing' (8 May 2009) Tilberg Univeristy, Discussion Paper 2009-30

Peter C Carstensen, 'Tying - Still a Competitive Evil' (Autumn 2012) 8(2) Competition Policy International

Jonathan M Jacobson, 'Exclusive Dealing, "Foreclosure" and Consumer Harm' [2002] 70 Antitrust Law Journal 311

Pranvera Kellezi, 'Rhetoric or Reform: Does the Law of Tying and Bundling Reflect the Economic Theory?' (2009) (at SSRN)

Bruce H Kobayashi, 'The Economics of Loyalty Discounts and Antitrust Law in the United States' (2005) 1(115) Competition Policy International (George Mason University School of Law, Law and Economics Working Paper Series, 05-26) (also at SSRN)

Ryoko Oki and Noriyuki Yanagawa, 'Exclusive Dealing and Large Distributors, CIRJE Discussion Paper, CIRJE-F-626, July 2009

Joshua D. Wright, 'Simple but Wrong or Complex but More Accurate? The Case for an Exclusive Dealing-Based Approach to Evaluating Loyalty Discounts' (Remarks of Joshua D. Wright, Commissioner, Federal Trade Commission at the Bates White 10th Annual Antitrust Conference Washington, DC, June 3, 2013

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.

Guide to exclusive dealing notifications

Guide to exclusive dealing notifications and excluding information from the public register

Exclusive Dealing Notification Process - The Basics

Refusal to deal