1. Resale Price Maintenance Section 48

2. What is resale price maintenance? It is illegal for suppliers to: put pressure on businesses to charge their recommended retail price or any other set price, for example by threatening to stop supplying to the reseller stop resellers from advertising, displaying or selling goods from the supplier below a specified price. It is also illegal for resellers to ask their suppliers to use recommended price lists to stop competitors from discounting. In most cases, a supplier may specify a maximum price for retail. 26 September 2013 (Week 9) (c) Cathryn Nolan/RMIT University 2

3. 6 types of (not mutually exclusive) conduct that is prohibited 1. Making it known to a person that the supplier will not supply goods or services unless the person agrees not to sell or resupply below a specified price: 2. Inducing or attempting to induce, a person not to sell or resupply goods or services below a specified price: 3. Entering into an agreement, or offering to enter into an agreement, for the supply of goods or services to a person, one of the terms of which is that the person will not sell or resupply goods or services below a specified price: 4. Withholding supply of goods or services to a person because a person has sold or resupplied goods or services below a specified price or will not agree not to sell or resupply goods or services below a specified price: 5. Withholding supply for the reason that a second person who has obtained, or wishes to obtain, goods or services from the first person has sold or resupplied goods or services below a specified price or will not agree not to sell or resupply goods below a specified price: 6. Using in relation to any goods or services supplied a statement of price which is likely to be understood as the minimum price for those goods or services: 26 September 2013 (Week 9) (c) Cathryn Nolan/RMIT University 3

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5. Exemptions Loss leader selling Suppliers may withhold supplies of goods to a company that engages in ‘loss leader selling’. That is, purchasing goods with the intention of selling the goods below their cost so that: the company can promote their business attract customers who are likely to purchase other goods or services. Does not apply to genuine clearances, or when a supplier has agreed to supply goods to a company for the purpose of loss leader selling. True recommended prices Recommended resale price (RRP) provided it is truly a recommendation only. It is illegal for the supplier to put pressure on retailers to charge the listed prices or any other set price (for example, RRP less 10 per cent). True agency arrangements A principal can always specify a price at which an agent must sell goods 26 September 2013 (Week 9) (c) Cathryn Nolan/RMIT University 5

6. Authorisation Since 1995 authorisations are available for RPM in relation to both goods and services Public Benefit test is set out in s90(8)(a)(iv). Examples of circumstances where there might be public benefit: Preventing free riding (the situation that occurred in TPC v ICI Australia Petrochemicals Ltd) As a means of facilitating market entry; To protect “prestige” goods or services; and To achieve an optimal numbr of retail outlets. 26 September 2013 (Week 9) (c) Cathryn Nolan/RMIT University 6 PRICES

7. Penalties can be significant Under s76, the maximum corporate penalty is up to the greatest of: $10m, or where the value of the benefit obtained from the contravention can be ascertained, three times the value of the benefit, or where the value of the benefit obtained from the contravention cannot be ascertained, 10% of the turnover in the preceding 12 months Contraventions by individuals involved in contraventions may result in penalties of up to $500,000. 26 September 2013 (Week 9) (c) Cathryn Nolan/RMIT University 7

8. What does a court take into account when assessing penalties? (S76 CCA) the nature and extent of the contravening conduct and the circumstances in which it took place (eg. was it deliberate?) the amount of loss or damage occasioned (including an assessment of its impact on the market and the overall commercial environment) the existence of any prior contraventions the size, resources and market power of the respondent TPC v Stihl Chain Saws (Aust) Pty Ltd whether the conduct was systematic, deliberate or covert the period over which the conduct occurred the involvement of senior management whether there was a corporate culture of compliance whether there was co-operation with the ACCC (which resulted in a 30% discount in Jurlique) the financial position of the respondent Parity principles (eg. pecuniary penalties in other resale price maintenance proceedings) 26 September 2013 (Week 9) (c) Cathryn Nolan/RMIT University 8