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Regulating unilateral supermarket misconduct as customer/acquirer of goods and services

Stephen Corones
(2015) 43 Australian Business Law Review 400



Supermarkets in Australia may have substantial market power as buyers in wholesale markets for grocery products. They may also have substantial bargaining power in negotiating contracts with their suppliers of grocery products. The Competition and Consumer Act 2010 (Cth) (CCA) regulates unilateral misconduct by supermarkets as customer/acquirers in three ways. First, s 46(1) of the CCA prohibits the “taking advantage” of buyer power for the purpose of damaging a competitor, preventing entry or deterring or preventing competitive conduct. Secondly, s 21 of the Australian Consumer Law prohibits unconscionable conduct in business-to-business transactions. Thirdly, Pt IVB of the CCA provides for the promulgation of mandatory and voluntary industry codes of conduct. Since 1 July 2015 the conduct of supermarkets as customer/acquirers has been regulated by the Food and Grocery Industry Code of Conduct. This article examines these three different approaches. It considers them against the background of the misconduct at issue in Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd which the ACCC chose to litigate as an unconscionable conduct case, rather than a misuse of market power case. The article also considers the strengths and weaknesses of each of the three approaches. It questions the effectiveness of s 46 as a consumer protection measure and argues that the “taking advantage” element of s 46 should be removed and replaced with a “substantial lessening competition” (slc) test.



Not freely available online