SkillBuilder discussion Investigating 1. What is predatory pricing, and why is it regulated in Australia? 2. How does predatory pricing impact competition in the Australian market? 3. What measures does Australian law provide to prevent predatory pricing practices?
FIGURE4 A supermarket cannot use low prices to harm other milk sellers.
Exclusive dealing Exclusive dealing happens when one business makes another business agree not to buy from its competitors. For example, a hair products supplier might say a hairdresser can only buy from them if they don’t buy from anyone else. Sometimes this is okay if it doesn’t hurt competition in the market. For instance, McDonald’s sells Coca-Cola but not Pepsi, while KFC sells Pepsi but not Coke, so there are still choices for customers. Businesses must tell the ACCC about such agreements, and the ACCC will check to see if they are fair.
Resale price maintenance
Suppliers can’t tell retailers what prices to set for their products. They can suggest a price, but it’s illegal to force retailers to stick to it. Retailers should be able to compete on prices with each other. It’s also illegal for suppliers to set a minimum price that retailers can’t go below or to stop them from offering discounts. However, suppliers can set a maximum price to prevent retailers from overcharging customers when they have no competition.
FIGURE5 Retailers must be free to compete on price with other retailers selling the same products.
Mergers and takeovers When two or more businesses join together, it’s called a merger. If one business buys another, that’s a takeover. Mergers and takeovers can reduce competition in a market. The law says businesses can’t merge if it lowers competition too much. Before merging, businesses can ask the ACCC for permission. If the ACCC thinks it won’t hurt competition, they might allow it. If businesses merge without permission and it reduces competition, the ACCC can investigate and take action.
574 Jacaranda Humanities Alive 7 Victorian Curriculum Third Edition
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