For all businesses to thrive there must be free, open and fair market competition. However, when a business becomes large enough to qualify as a monopoly, or businesses band together with the specific intent of damaging the ability of smaller businesses to thrive, anti-competitive sanctions can result.
What law protects the small business owner against anti-competitive actions?
The genesis of protecting all businesses from anti-competitive actions is the Competition and Consumer Act of 2010. This act lays the legal groundwork for eliminating and/or punishing anti-competitive behaviour amongst and between businesses. The law restricts any arrangements between businesses, be they oral or in writing, that would chill the business of a competitor. Those involved need only to create a business environment that effectively causes, or is likely to cause, a significant reduction in market competition.
What types of business actions qualify as being significant enough in size and economic power to create an anti-competitive environment?
- Cartels – A group of businesses agree not to compete with one another, thereby engaging in price-fixing, market reduction or division, colluding on bidding for the cost of products, supplies or services
- Imposing Minimum Resale Prices – All businesses are allowed to sell their product or resell a product at the prices they deem. However, when a group of businesses agree or pressure others to set a minimum price for a product or service, this is considered anti-competitive behaviour. Another form of imposing minimum resale prices is when suppliers attempt to prevent resellers from advertising or offering the product at lower price than recommended.
- Exclusive Dealings – When one business forces or pressures another to deal only with those that they agree to, thereby limiting the businesses freedom of choice as to whom they will do business with.
- Collective Bargaining/Boycotts – Collective bargaining and/or boycotts occur when businesses of the same or similar product or service band together to negotiate with suppliers or customers. By collective bargaining or boycotting a particular supplier or customer, such actions leave the supplier and/or customer with no other businesses to engage with for a fair deal.
- Misuse of Market Power/Monopoly – A monopoly is when a particular business that all persons are dependent upon, such as a power company, engages in activity that creates an unfair pricing structure. When this happens the consumer must continue to buy from this single source as there is no other supplier available. Misuse of market power is similar in that the company providing the service holds a very large share of the market and abuses that power in an effort to eliminate or reduce competition of smaller businesses.
- Unconscionable Conduct – This form of business conduct does not have a particular definition. In these instances, the Courts are looking to see if a particular business or group of business acted in a manner that is so unfair and abhorrent as to substantially reduce the business of all those not involved in the conduct.
If you are a small business owner these types of business dealings can significantly impact your ability to do business in a fair and competitive environment. As such, if you have evidence of other businesses engaging in cartels, imposing minimum resale prices, creating exclusive dealings, joining in collective bargaining or boycotting, engaging in the misuse of market power or acting in an unconscionable business manner, it is important to reach out to those agencies who are tasked with monitoring this type of illegal behaviour.
If you find yourself in need of assistance with this or any other legal issue, please contact the law offices of Owen Hodge Lawyers. At Owen Hodge, we are always happy to assist clients in understanding the full ramifications of any and all of your legal needs. Please feel free to call us at your earliest convenience to schedule a consultation at 1800 770 780.