Home Page / Legislation / Competition and Consumer Act 2010 / s 44ZZRS

Competition and Consumer Act 2010 (Cth)

WarningSection 44ZZRS
Exclusive Dealing

Note: The Harper Reforms came into operation on 6 November 2017. This section has been modified and re-numbered. This page reflects the content of the provision immediately prior to the commencement of the Harper Reforms. Please visit section 45AR for the current provision

 

The provision

(1) Sections 44ZZRF and 44ZZRJ do not apply in relation to the making of a contract, arrangement or understanding that contains a cartel provision, in so far as giving effect to the cartel provision would, or would but for the operation of subsection 47(10) or 88(8) or section 93, constitute a contravention of section 47.

Note: A defendant bears an evidential burden in relation to the matter in  (1) (see subsection 13.3(3) of the Criminal Code and subsection (3) of this section).

(2) Sections 44ZZRG and 44ZZRK do not apply in relation to the giving effect to a cartel provision by way of:

(a) engaging in conduct that contravenes, or would but for the operation of subsection 47(10) or 88(8) or section 93 contravene, section 47; or

(b) doing an act by reason of a breach or threatened breach of a condition referred to in subsection 47(2), (4), (6) or

(i) an authorisation under subsection 88(8) is in

(ii) by reason of subsection 93(7), conduct engaged in by that person on that condition is not to be taken to have the effect of section 47; or

(iii) a notice under subsection 93(1) is in force in relation to conduct engaged in by that person on that condition.

Note: A defendant bears an evidential burden in relation to the matter in subsection (2) (see subsection 13.3(3) of the Criminal Code and subsection (3) of this section).

(3) A person who wishes to rely on subsection (1) or (2) in relation to a contravention of section 44ZZRJ or 44ZZRK bears an evidential burden in relation to that matter.

 

Legislative history

 

Relevant cases

ACCC v Olex Australia Pty Ltd [2017] FCA 222
Case dismissed - cartel allegations

 

Commentary

Background to introduction

The insertion of this provision was part of the package of reforms introducing criminal penalties for cartel conduct. The reforms also created a parallel civil cartel prohibition, replacing the former s 45A which dealt directly with price-fixing.

The reforms were initially recommend by the Dawson Committee as part of its 2002-2003 inquiry into the Competition Law provisions of the Trade Practices Act.

Cases

This anti-overlap provision was raised by one of the defendants in ACCC v Olex Australia Pty Ltd [2017] FCA 222. Justice Beach observed:

[661] The respondents assert that the giving effect to of the support provision in respect of the alternatively alleged arrangement between Olex (but not Prysmian) and the Wholesalers would, or would but for s 47(10) of the Act, constitute exclusive dealing within the meaning of s 47(2) and/or s 47(4) of the Act. Rexel also asserts that the giving effect to of the MOV provision and the cutting fee provision constitutes exclusive dealing. Accordingly, the respondents allege that by reason of s 44ZZRS and/or s 45(6), the pleaded contraventions involving the making of the support provision and in the case of Rexel, the making and giving effect to of the MOV provision and the cutting fee provision, do not amount to contraventions of ss 44ZZRJ, 44ZZRK and 45(2).

[662] But I agree with the ACCC that the asserted defences have no application to any of the alleged contraventions. Giving effect to each of the provisions would not involve a relevant supply or acquisition on condition (as required by ss 47(2) and 47(4)). The support provision required that the Wholesalers not reduce the value and/or volume of electrical cable that they acquired from Olex by reason of the increased cutting and/or MOV fees. The alleged purpose of the provision can be distinguished from the conduct or commercial activities required to give effect to it. Nothing in the support provision involved Olex supplying cable to the Wholesalers on the condition that they not acquire (or not acquire except to a limited extent) cable from any competitor of Olex. In addition, nothing in the support provision involved the Wholesalers acquiring or offering to acquire cable from Olex on condition that Olex not supply (or not supply except to a limited extent) cable to contractors and/or end-users. All that was required to give effect to the support provision was that the Wholesalers not reduce the volume and/or value of electrical cable that they acquired from Olex by reason of the increased cutting and/or MOV fees. In relation to the MOV provision and the cutting fee provision, none of the conduct that the ACCC alleges the relevant respondents engaged in to give effect to those provisions involved a relevant supply or acquisition on condition as required by s 47(2) or s 47(4), nor would giving effect to the MOV provision and the cutting fee provision have required (in an objective sense) any conduct that would be captured by s 47(2) or s 47(4).

[663] The defences contained in ss 44ZZRS and 45(6) do not apply to the present context.

[760] Now I agree with the ACCC that strictly a direct bid by Prysmian is treated for competition law purposes as distinct from, and as competing with, a bid made by Rexel Electrical, notwithstanding that Prysmian may have been supplying the product in Rexel Electrical’s bid. The bid rigging prohibition contains a carve-out for vertical supply relationships. It applies where the conduct falls within s 47 of the Act (see s 44ZZRS). But the conduct alleged against Prysmian and Rexel Electrical does not fall within the s 47 carve out and there is no other carve out for vertical supply situations.

More information

See further information and resources on the cartel page.