Australia: The ACCC says "no" to minimum price advertising

Key Points:

Toughening retail conditions is not going to cause a change in the strict application of competition principles.

Retail conditions in the current Australian economic climate are weak. Consumers are taking a more measured approach to borrowing and spending than they have in the past. Bricks and mortar stores are being challenged by retailers with online strategies, and consumers are purchasing more goods over the internet than ever before. The average Australian consumer's purchasing behaviour is fundamentally changing.

In that context, the Australian Competition and Consumer Commission (ACCC) has been considering retail issues carefully, and in particular has been opposed at a policy level to any conduct which has the potential to impede the emerging competition offered through online retail.

The approach then of the ACCC to a recent application by a retail association seeking to set a minimum advertising price (MAP) for its members, has been to assess the application within the changing retail framework and, in light of its policies, reject the application. Here's how it played out.


In Australia, authorisation is a mechanism by which the ACCC may grant statutory protection to an applicant engaging in conduct which might otherwise contravene the Competition and Consumer Act (CCA). To grant authorisation, the ACCC must be satisfied that, despite the breach or likely breach of the CCA the authorised conduct is likely to result in a public benefit which outweighs any likely anticompetitive detriment.

The proposed conduct

Narta is an acronym for the "National Associated Retail Traders of Australia", a buying group of unrelated and therefore competing electrical goods retailers operating in Australia. Narta's members offer differentiated brands and alternatives in terms of price and non-price factors through product types, ranges and overall consumer experience. Narta represents a significant proportion of the retailers of electrical goods in Australia, including the major department stores David Jones and Myer.

Narta is involved in negotiating terms of supply for its members.

Narta sought an Authorisation for 10 years to allow its members to enter into, and give effect to, an amended version of the Narta Code of Conduct. Under the amendments, members would agree to abide by any MAP unilaterally set by Narta across a range of collectively acquired goods, although they would be able to advertise at prices at or above the MAP.

Central to Narta's application for Authorisation of a MAP was the issue of acquisition of "exclusive" consumer electrical products. These were defined by Narta as products which belong to the Beko brand; product models exclusively available to only one or a limited number of retail groups; and/or new release products. Such exclusive products are highly valued by retailers because of the inherent distribution restrictions.

Narta sought Authorisation for a MAP because:

  • compared to other banner groups and large retailers, its members had difficulty in sourcing exclusive products unless they could guarantee consistent pricing across members; and
  • Narta believed the access to those products would permit its members to compete on a "level playing field" with the banner and large retail groups. Access to the products meant access to the consumer.

Narta's strategy in introducing a MAP was to make the sale of goods to its members more attractive to suppliers, thus enhancing the offering of those members and enabling them to compete.

Effectively, Narta was suggesting that establishing a floor price for its members was going to lead to a better competitive position for those members, as more stores would have access to exclusive consumer electrical products.

However, it was also asking the ACCC to swallow the proposition that maintaining a floor price in members' stores would be better for consumers, and indeed, would have a public benefit that outweighed the anticompetitive detriment.

Narta's submissions on the Authorisation

The key submission underpinning the application for authorisation was that suppliers of exclusive products had indicated a desire for a consistent marketing message by retailers. This would offer brand protection for suppliers who were continually investing in research and development. Narta submitted that consistent advertised pricing was an integral aspect of the package that suppliers were demanding.

In the absence of the proposed conduct, Narta submitted that its members would be unable to provide consistent pricing messages to the market. The likelihood of Narta members therefore gaining access to exclusive products was diminished, and the ability of members to compete with other retailers in the relevant markets was compromised.

Narta further submitted that, in the absence of consistency, suppliers of exclusive products would be more likely to consider alternatives, such as limited product distributions, including to selected retail banner stores that could offer brand protection, opening supplier owned stores, and/or selling products through the "agency" model which permitted the supplier to directly control the pricing of products.

The loss of access to exclusive products would lead to a loss of consumers for Narta members.

Narta told the ACCC that a MAP would only be imposed where it was necessary to enable Narta to obtain supply of exclusive products, or products on preferential terms. For instance, a MAP would be imposed where it was necessary for Narta to:

  • access a new release product at launch;
  • qualify for a period of exclusivity or limited distribution of a new product at launch;
  • negotiate access to an exclusive model for a promotional period; or
  • access an exclusive house brand product (such as Beko).

Unlike other products, Beko products would be subject to a MAP for an indefinite period because Narta had an exclusive right to distribution in Australia.

Narta proposed setting the MAP according to current market conditions, focusing on competitor advertised prices of substitutable products and the projected levels of consumer interest. Narta did not intend to link the MAP to a supplier's recommended retail price or impose any other limitations or restrictions on a member's price at point of sale.

Narta made submissions that a number of public benefits were likely to arise from the proposed conduct, including:

  • increased retail competition, as products would be available in more stores;
  • increased consumer choice;
  • enhancements to the competitive process through maintenance of diversity in the variety of retail channels; and
  • improved competiveness of the retail supply chain.

Narta also said that the proposed conduct was unlikely to result in public detriment because:

  • selling prices would diverge significantly from advertising prices;
  • advertising prices are compared online by consumers;
  • a MAP would only be applied to a small proportion of goods;
  • members would not be required to stock products subject to a MAP; and
  • the conduct would address the need for Narta members to respond to increased concentration in the relevant markets.

The ACCC's view of the proposed Authorisation

The ACCC rejected Narta's application on the basis that it was not satisfied that the proposed conduct was likely to result in any public benefit that would outweigh the likely detriment to the public.

Upon issuing its determination, ACCC Deputy Chair Dr Michael Schaper stated:

"The ACCC has denied authorisation because Narta's proposed conduct would be likely to result in significant public detriment by reducing competition between retailers and raising both the advertised and selling prices of electrical products."

In applying the "net public benefit test", the ACCC concluded that the proposed conduct was likely to result in minimal public benefits in the form of increased competition between retailers for the acquisition and retailing of exclusive products.

The ACCC also formed the view that there would be significant public detriments from the lessening of competition between electrical goods retailers, and in higher retail selling prices for products subject to a MAP. The extent of that detriment would be conditional on a range of factors, including the number of products subject to a MAP, consumer demand for MAP products, the availability and closeness of substitutes for MAP products, and the extent to which a MAP became the reference point for actual selling prices.

The ACCC agreed that without the proposed conduct some Narta members may not acquire exclusive products. However, it also thought that suppliers would decide which retailers to supply according to a range of factors, and whether or not a MAP was imposed was only one of the factors.

Further the ACCC took the view that:

  • differentiation amongst Narta members in terms of overall retail offers could be a competitive advantage and would be desired by suppliers in certain instances;
  • new suppliers, including overseas brands, would not necessarily be disinclined to use Narta members to enter the Australian market; and
  • Narta members who had a "significant market presence" as "category dominant specialists" may not in fact be disadvantaged without a MAP. Those suppliers may have been able to acquire the exclusive products in any event.

With the proposed conduct:

  • consistently advertised prices were not guaranteed, as members could elect to advertise at prices higher than the MAP, and the MAP would be set according to a range of dynamic factors; and
  • intra-brand and inter-brand competition would be likely to lessen as advertising and sales prices would likely be at a higher overall level.

Impact on online trading

The ACCC was also clear in its view that there would be an impact on online trading, and the competition offered through online retailing would be lessened by the imposition of a MAP.

Online trading, and the competition it offers to bricks and mortar stores, is an issue the ACCC has been focused on for some time. The Chairman of the ACCC said in a recent speech that the ACCC would continue in its enforcement activities to give priority to "online competition and consumer issues including conduct which may impede emerging competition between online traders or limit the ability of small businesses to effectively compete online".

This policy flavour is certainly present in the ACCC's decision on the proposed Authorisation, although it also said that the impact on online trading was not pivotal to its decision-making process.

The ACCC noted that the imposition of a MAP would set the lowest price at which MAP products will be advertised. This eliminated Narta members' downward price flexibility, leaving room only for an increase in both advertised pricing, and potentially, selling prices through reference pricing to the MAP.

In the context of online sales however, there is no ability for a customer to negotiate price, which is a possibility in bricks and mortar stores. Accordingly, as consumers who browse online are able to view and compare prices offered by retailers quickly and easily, that price transparency provides an incentive to those retailers to set their prices at the lowest level. Where there was a MAP, that flexibility was removed. Online selling prices were likely to be higher with a MAP than otherwise, lessening the competitive constraint that online retailers would otherwise place on bricks and mortar retailers.

The MAP was also likely to disadvantage those Narta members who only operated online stores. They would be bound to a price likely to be set by reference to the costs of operating a bricks and mortar store, and would be obliged to maintain that price.

Online price comparisons were therefore unlikely to mitigate the effect of reduced price competition.


In Australia at least, toughening retail conditions is not going to cause a change in the strict application of competition principles. While the market may be changing, the ACCC does not intend to move away from the principle of "protecting competition" to "protecting competitors". These things are not the same, and the ACCC knows it well.

Retailers will need to continue to compete for the consumer dollar as best they can. The competition offered by online trading is squarely within the ACCC's considerations, and its effect, and any potential effects on it, will continue to be central to the ACCC's considerations about the retail market.

This article was first published in Competition Law Insight, 30 July 2013

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.