Competition & Trade Practices
7. Exclusive Dealing
Authors: Staff Legal Eagle
Firm / Chambers:
Last updated: 11 Jul 2015
- A business engages in exclusive dealing when it imposes a restriction on a buyer’s ability to deal with others as a condition of supplying goods or services to that buyer. It is illegal to impose such a condition. Some forms of exclusive dealing are prohibited outright. Other forms of exclusive dealing arrangements are only unlawful when they substantially reduce competition in a market.
- Third line forcing takes place when a seller supplies goods or services or offers a discount on the condition that the buyer will only purchase goods or services from a specified third party. This kind of behaviour is prohibited outright except where it takes place between related companies.
- Related companies need to notify the Australian Competition and Consumer Commission (ACCC) if they propose to engage in this type of conduct.
- Other types of exclusive dealing such as full line forcing are allowed unless they substantially reduce market competition. Full line forcing occurs when a supplier will only trade goods or services with a buyer who agrees that they will:
- refuse to supply those goods or services to a specified person;
- not buy goods or services from the supplier’s competitor; or
- sell goods or services which they have bought from a competitor of the supplier.
- Generally speaking if the supplier is powerful and the product is not exclusive then competition is more likely to be affected.
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