We use cookies to give you the best online experience. By using our website you agree to our use of cookies in accordance with our cookie policy. Learn more here.Close Me
The Federal Court breathed new life into section 46 of the
Competition and Consumer Act (Cth) 2010 when it recently found that
Ticketek Pty Ltd had contravened the provision. The court issued a
penalty of $2.5 million, finding Ticketek had engaged in
anti-competitive behaviour on four occasions. The court found that
Ticketek took advantage of its substantial degree of market power
in the market for the supply of ticketing services for the purpose
of deterring or preventing Lasttix (a rival ticketing company) from
engaging in competitive conduct.
Commentators and lobbyists have argued that the section lacks
teeth, but the Ticketek decision is a timely reminder that it
remains a powerful provision. This is particularly the case given
the increasingly broad definition of a market. Businesses need to
be conscious of the market within which they, their franchisees,
their suppliers and even their customers operate, and assess
whether any of them have a 'substantial degree of market
power' in the relevant market. If so they need to consider
section 46 before taking action which may limit the operations of
their competitors or the choice of consumers.
Substantial market power and misuse of market power
Ticketek was found to have a substantial market power in the
market for ticketing services because of its 45 per cent market
share of the total number of tickets sold for live entertainment
events across Australia. Ticketek was found to have misused this
market power by refusing on a number of occasions to implement a
discount ticket offering which was supplied through Lasttix on
Ticketek's system for a number of events, despite requests to
do so from the promoters of the events. In response to one
promoter's request to use the discount ticketing system through
Lasttix, Ticketek responded:
"Ticketek have no affiliation with Lasttix and are opposed
to facilitating offers to their members by allowing them to
piggyback off our transactional website, and in particular when
those offers are more favourable than what has been made available
to our own customers."
The objectives of the section 46 prohibitions on
anti-competitive behaviour are to create a competitive environment
which in turn creates follow on benefits to the consumer. The ACCC
in its guidelines state that when determining whether a business
has misused its market power they will ask three questions:
does the business in question have substantial market
power?
is it taking advantage of its substantial market power?
is it using its power for an illegal purpose?
Market power is said to refer to a business' ability to act
in the market free of constraints. An example of market power may
be a business' ability to raise prices without fear of a rival
business being able to set lower prices and subsequently taking
away customers. It is important that businesses correctly identify
the relevant market within which the conduct is occurring because
if the relevant market is smaller or narrower than what the
business has initially identified, it is more likely the business
will have substantial market power, which may heighten the risk of
a contravention of section 46 of the CCA.
In considering whether a business has taken advantage of its
substantial market power, the ACCC have stated that courts can
consider any or all of the following factors:
did the substantial degree of market power facilitate the
conduct?
did the business engaging in the conduct rely on its
substantial degree of market power?
would it be likely for the business to engage in the conduct
without a substantial degree of market power?
is the conduct in any other way related to the substantial
degree of market power?
Illegal purpose
For the purposes of section 46 of the CCA a business will be
considered to have used its substantial market power for an illegal
purpose when they intentionally engage in conduct that:
substantially damages or eliminates a competitor generally, a
specific class of competitor, or any particular competitor;
prevents or deters a business or person from entering into that
market; or
prevents or deters a business or person from engaging in
competitive behaviour in a market.
Conclusion
Given the availability of high civil pecuniary penalties and the
court's willingness to award those high penalties, it is likely
that the ACCC will remain active in this area and businesses should
carefully consider their position in the market place before taking
action which may impact competitors or reduce consumers'
choice.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
A new record has been set in Australia for fines for misuse of market power. Some are saying a new era of enforcement has dawned in misuse of market power prosecutions.
In the case of Cosco Bulk Carrier Co Limited v Team-Up Owning Co Limited (the ‘Saldanha’) [2010] EWHC 1340, Mr Justice Gross in the English High Court recently determined that piracy did not interrupt the hire period in a charter party on the New York Produce Exchange (NYPE) form.
