Discuss and critically Analyse the court/Tribunal decision and the reason for the decision.
The government of Australia has seen the need to protect the rights of consumers to avoid abusive business practices through legislation that in some cases, cross borders. These laws are accompanied by specialized agencies responsible for information and advice about it. In this regard, use of web platforms to inform consumers based on the premise of “knowing your rights can claim them.” However, challenges are still pending regarding the time taken to complete trials and the benefits gained by consumers once the host demand.
The LCA is a cooperative reform government of Australia through the Consumer Council of Ministers (CACM) (Komawar, 2010). This new law gives consumers the same rights and safeguards throughout Oceania, and the creation of a single system of national application with enforcement powers to agencies Consumer Protection, new penalties for companies and repair options for consumers .
This new Consumer Law is regulated jointly by the Securities and Investments Australia (ASIC), the State agency for consumer protection and the Australian Competition Commission and Consumption ACCC, the latter being the body responsible for promoting benefit fair trade consumers, businesses and the community.
among the cases dealing with consumer protection law we discuss and analyze in this paper are ACCC v Baxter Healthcare [2007] for misuse of the market power which is a power misused by a lot of these companies. Secondly was a charge based on Baxter healthcare exclusive dealing and lastly was the charge on immunity crown derivative.
the second case is ACCC v Leahy Petroleum Pty Ltd [2007] for prices fixing charges and the meaning of contract, understanding and agreement.
The Australian consumer is protected against:
1. conducive deceptive or misleading attitudes. A company can break the law if you do not disclose some important information about the product or creates a conducive deceptive or misleading attitude about the value or quality of goods and services.
2. Letter girl. The company cannot rely on the “fine print” to fool the customer. The important features of a product or service must be explained with clear and notorious letter.
3. Misleading advertising. A company cannot advertise products or services at a discounted price if you have limited quantities of the product offered.
4. Acceptance of undue payment. A company cannot accept payment for goods or services if you do not intend to make delivery, or if you cannot deliver.
5. Country of origin. A company cannot mislead consumers about a country in which they were manufactured, produced or grown products.
6. Discrepancies between price shop and catalog price. In these cases the company must sell the product at the lowest price.
7. inequitable conduct, ie when the company is expressed abusing the “goodwill” of the consumer. It does not explain the contract knowing that the consumer does not speak English or when induced to sign a blank contract or unfavorable.
ACL replaces the previous legislation which operated since 1974 and clarifies the understanding of parties, consumers and businesses (Komawar, 2010). It is estimated that the benefits to the community will range from AU $ 1.5 billion to $ 4.5 billion AU.
Baxter healthcare Pty ltd was involved in the civil suit by ACCC due to supply of state purchases of sterile fluids used in treatment of dialysis patients. Baxter are a manufacturer of intravenous (IV) solutions, nutritional products and peritoneal dialysis fluids. The control of the market by this company makes it have a monopolistic competitive advantage. State purchasing authority (SPA) was to be supplied by Baxter the sterile and Pd fluid which it had a real competition in supply. However, it offered either good items at high prices or bundled items at significantly low prices to beat the competitors during the award of the tender. The lower prices were on terms and conditions that Baxter be offered the contract to supply on sole supplier basis.
Allegation
During the court case hearing, it was alleged by ACCC that Baxter had used its powers to fair competition in the wrong way. It had contravened the powers of exclusivity, dealing exclusively and provisions of market power misuse (Howells and Weatherill, 2005). The market power it enjoyed in supply of the medical products effectively compelled the SPAs to exclusively enter into contractual agreement for the supply including the PD fluids.
Derivative crown immunity
It was held by majority of the court during the proceedings that the parties in question SPAs and Baxter did not have the benefit of crown immunity when thjey were dealing with each other. ACCC had brought charges that the company had contravened the act therefore benefiting from the derivative crown immunity.
Exclusive dealing
It was held by majority of the Federal Court that the company contravened article 47 of ithe consumer protection law; in particular, it effectively lessened the competition due to its state of monopoly it enjoyed thereby dealing exclusively to supply.
Misuse of the market privileges and power
The court held that Baxter in this occasion had a substantial and significant power in respect to the supply of PD fluids which it had taken advantage of this process to reduce competition.
Allegation
This was a long case that had a lot of ramifications for the companies. ACCC had held allegations that several retailers dealing in petroleum products within the Geelong area had effected price fixing provisions. It was alleged that the parties in question had made several calls to each other and had engagements on raising prices after the calls. They discussed the time to effect the price increase and also the possible increase margins.
The trade practices act had been contravened due to the arrangements by the petroleum retailers. In the court it was held that there was no contract, there was no arrangement, and there was no understanding between the parties. It was held by the high court that there was no obligation to increase the prices. Additionally, the terms in contract, arrangements and understanding are only intended to represent consensual dealings spectrum. No corporation is intended to make contracts or stated arrangements to fix prices which are in contravention of the trade practices act to arrive to a pre determined agreement. The other party must be involved in making, arriving at the conclusions of the contract, understanding or arrangement.
There must be forms signed of contractual dealings. A contract form is one of the three. It is a high degree formal agreement showing the consensual dealing. All parties in a contract must agree to it in order for it to be enforceable by law. Arrangement form is of a lesser degree in formal arrangement (Howells and Weatherill, 2005). There should be express communication by parties involved but less formal than a contract. Arrangement form has a susceptible elasticity in meaning.
It was held that in this case the petroleum dealers had no case to answer due to the following agreement, understanding and contractual terms.
What is an anti-competitive agreement?
An anticompetitive agreement is any contract, agreement, concerted practice or consciously parallel between two or more undertakings that prevent, restrict or distort competition or have the potential to fill one of these effects.
The anti-competitive agreements can be anti-competitive by themselves or by their effects. The former are called cartels.
Anti-competitive agreements can be presented in different parts of the production chain: It is called horizontal agreements those agreements between companies providing similar goods or services or substitutes in a single link in the production chain. An example of this is agreement among corn producers.
It is called vertical agreements those agreements between economic agents which are at different levels of the production chain, for example, which arise between a corn producer and wholesale distributor
Current regulations considers that an agreement can be anti-competitive by object or effect. Anticompetitive by object are those agreements whose purpose, regardless that have actually been executed on the market, qualifies as such. An agreement is anti-competitive by its effect when the result of the same, regardless of the order to the parties, has anti-competitive effects on the market.
Companies participating in a market as a poster do in order to agree on prices, set production quotas or share markets. So, cartels are formed in order to remove the pressure from competing companies since, in the absence of the cartel, the companies are forced to keep prices down and innovation in products and methods, and / or improve their quality (Howells and Weatherill, 2005). The poster can maintain higher prices, fixed prices, lower quality and less variety of goods and services, which affects consumers.
Dominant position
What behaviors constitute an abuse of a dominant position? As mentioned earlier, the dominant position is not necessarily anti-competitive; in fact, the result of vigorous competition may result in the acquisition of a dominant market position. Now, if a company uses its dominant position to exclude or exploit their competitors or consumers, it is said that abused.
According to Article 50 trade practice act , when there dominant position constitutes abuse of the same the following behaviors: Declining prices below costs, also called predatory pricing.
The term “dominant position” refers to the ability of a company to determine the conditions of the relevant market in which it participates. This means that the company has the possibility, regardless of your competitors are doing, to set prices, amounts of production, quality of assets, etc., regardless of the pressures of competition. This, in turn, can affect your competitors for consumers or participants in the market.
What does define the relevant market?
In the product market the product characteristics are determined or, in other words, the characteristics that define it, ie, qualities that can be used to differentiate and singling regarding similar or similar.
How do you test that a company has committed an abuse of a dominant position?
First, it must prove that the company has a dominant position as a result of the characteristics of the market and their position in it, taking into account such factors as their share in this, the financial capacity of the company, barriers entry, network effects or legislation blanket. (Howells and Weatherill, 2005)
Second, it reveals the effects that the conduct on the market was necessary, considering that not necessarily the competitor must have been expelled from it.
It should be noted that companies with dominant position must be particularly careful in their behavior in the market and, therefore, sufficient that the object of their conduct involves a loss or impairment in social welfare that abusive conduct is configured.
What acts are considered contrary to free competition?
According to Article 48 , considered contrary to free competition are the following acts:
Influence a company to increase the prices of their products or services or to desist from its intention to cut prices.
Refusing to sell or provide services to a business or discriminate against it as this would be seen as a retaliation to its pricing policy.
Depending on the outcome of the preliminary investigation the need to open a formal investigation will be determined. This will personally notify the investigation to request or provide evidence seeking to enforce.
Conclusion
During the investigation the evidence requested considers appropriate be practiced. Instructed the investigation, the Superintendent will present a reasoned report to indicate whether or not there was a violation. That report shall be conveyed to the investigation and interested parties, if any, who will present their observations.
To establish the existence of an infringement of the laws and to take appropriate action, the ACCC is authorized to carry out the decree and practice of various exhibits, visits, and applications to individuals or entities for the provision of data, reports, books and trade papers.
An investigation for violation of the rules on restrictive business practices may be terminated early by granting guarantees (Howells and Weatherill, 2005). To this it will be required to present investigated his offer before the expiration of the term granted by the Superintendence of Industry and Commerce to request or provide evidence. Failure to comply with the obligations arising from the acceptance of guarantees is considered a violation of the rules of protection of competition and will lead to the penalties provided by the Australian law, at the request of the explanations required.
References
ACCC intervention in private proceedings. (2002). [Dickson, A.C.T.]: Australian Competiton and Consumer Commission.
ACCC telecommunications reports 2001-02. (2003). Dickson, A.C.T.: ACCC.
ACCC working in Victoria. (1999). Canberra: Commonwealth of Australia.
H.R. 503, a bill to amend the Horse Protection Act. (2006). Washington: U.S. G.P.O.
H.R. 3402, the Calling Card Consumer Protection Act. (2010). Washington: U.S. G.P.O.
H.R. 3993, the Calling Card Consumer Protection Act of 2009. (2012). Washington: U.S. G.P.O.
Howells, G. and Weatherill, S. (2005). Consumer protection law. Aldershot, Hants, England: Ashgate.
Komawar, S. (2010). The Consumer Protection Act. Nagpur, Maharashtra: All India Reporter.
Monitoring of the Australian petroleum industry. (2008). Canberra, ACT: Australian Competition and Consumer Commission.
The International Consumer Protection Act of 2003. (2003). Washington: U.S. G.P.O.
The International Consumer Protection Act of 2003. (2003). Washington: U.S. G.P.O.
Trade Secrets Protection Act of 2014. (n.d.). .
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