Changes to the Competition and Consumer Act – Third Line Forcing
Published: 20 Nov 2017
Parliament has recently passed important legislative amendments to Australian competition law following recommendations from the 2015 Harper Competition Policy Review. The legislative amendments contain a wide range of changes to the Competition and Consumer Act 2010 (CCA) in areas such as third line forcing, misuse of market power, cartels, price signalling and concerted practices and resale price maintenance (amongst others).
This article will focus on the amendments to the third line forcing laws and how the amendments will impact notification requirements to the ACCC.
What is third line forcing?
Third line forcing is a form of exclusive dealing, and occurs when a business will only supply goods or services, or give a particular price or discount on the condition that the purchaser buys goods or services from a particular third party. If the purchaser does not comply with the condition, the business will refuse to supply the purchaser with goods or services.
How has the law changed?
Until the amendments, third line forcing was a ‘per se’ breach of the CCA, meaning that it was automatically a breach of the CCA unless there was a valid notification with the ACCC in place. The legal test has now changed so that third line forcing will only breach the CCA if the restriction is likely to substantially lessen competition.
How will this impact your practices?
By removing the automatic breach rule, businesses now no longer have to automatically lodge an ACCC notification where they expect to engage in third line forcing unless they are concerned that their conduct may substantially lessen competition. The ACCC anticipates that many of the types of arrangements that have been notified to date will no longer require notification, as most third line forcing arrangements which are currently notified have only a minor effect on competition and are therefore not likely to substantially lessen competition.
To reflect the change in approach to required notifications, the ACCC has also increased the fee for lodging a third line forcing notification from $100 to $2500 per notification.