On 25 March 2022, the Australian Federal Court ordered the Australasian Food Group, trading as Peters Ice Cream ("Peters") to pay a $12 million fine for engaging in anti-competitive exclusive dealing.
Peters acknowledged that the exclusive dealing restriction which applied across various geographic regions had the effect of substantially lessening competition in the market and that without the restriction, other smaller competitors may have entered the market.
Exclusive Dealing under the Competition and Consumer Act ("CCA")Exclusive dealing refers to a number of vertical restraint practices that are detailed in s 47 of the CCA. These broadly correspond to the different types of tying conduct that are regulated in other jurisdictions as part of prohibitions on monopolisation or abuse of dominance.
In this case, Peters engaged in exclusive dealing when it agreed to acquire the services of PFD on the condition that PFD agreed not to supply its products or services to Peter's competitors or would limit the extent to which it does so.
Exclusive dealing is not a per se contravention of the CCA and is only prohibited where it has the purpose, effect or likely effect of substantially lessening competition in the relevant market. Whether an exclusive dealing arrangement is likely to substantially lessen competition requires a detailed assessment. Broadly speaking, the more competitive a given market i.e., the more buyers and sellers in competition with one another, the less likely that an exclusive dealing arrangement will be found to substantially lessen competition. Conversely, firms that have a dominant position in their respective market, as was the case with Peters, or otherwise compete in a concentrated market, are more likely to be found to have engaged in anti-competitive exclusive dealing.
Exclusive dealing is listed by the Australian Competition and Consumer Commission as a compliance and enforcement priority for 2022. Moving forward, it is likely that this case will serve as an example in relation to enforcement of s 47 breaches and the corresponding penalties that might be sought.
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