Trade Practices - examples
Price fixing
Example 1
The Real Estate Institute of Western Australia developed some units for real estate training. It used those units itself as part of its teaching of the Certificate III in Property Services (part of the course for getting a real estate licence). The usual price of doing one unit at the REIWA was $780. A number of TAFE colleges in the area also offered real estate courses. The REIWA offered to licence its units to the TAFE colleges. One of the terms of the contract was that the colleges would not offer the units to their students at a fee less than $780.
This is an example of real life price fixing - and it is illegal. The colleges had to undertake not to repeat their mistake; and implement a trade practices compliance program at each college.
The REIWA had done some other things wrong as well, so their penalty was more severe. Even the solicitor who drafted the contract for the REIWA was ordered to attend a trade
practices compliance seminar.
See (1999) ATPR 41-673 and (1999) ATPR 41-719
Example 2
You are in charge of the Barton University Bookroom. At a book fair, you have a cup of tea with your equivalents from Major Mitchell College Bookshop and the University of Bathurst Co-op. You mention that you are going to be decreasing the normal student discount from 10% to 7.5%. The others think that is a great idea.
Believe it or, this could also be price-fixing. If one of the others decreased their discount as well, you could all be in trouble even though the conversation was informal; you didn't intend that the others should copy you; there was no 'agreement' in the sense of a conscious decision to collude; and you don't think anyone can prove anything.
Example 3
The Vice-Chancellors of Batman, Bairnsdale and Barton universities regularly meet to discuss educational matters. After the Government reduces funding by 20%, they commence discussions about possible efficiency savings. At one meeting, the Vice-Chancellors agree to rationalise operations. They allocate the more vocationally oriented engineering students to Batman and the purely theoretical engineering students to Bairnsdale. Barton University agrees to discontinue its engineering programs in exchange for a greater presence in the growing market for legal education.
This is a market sharing agreement between competitors. It could be illegal under more than one provision of the Trade Practices Act, including this one and the new cartel conduct provisions.
It may, however, be sensible from an efficiency and effectiveness viewpoint for the universities to seek to have such an agreement legitimised by an approach to the ACCC for authorisation. Contact Legal Services for more information.
Example 4
Barton University plans to develop a large portion of university land to build a new engineering faculty. First of all, the site needs to be cleared and drained and it is decided to put the job out to select tender among six qualified firms. Five of the six firms lodge their bids two days before the close of the tender.
All five tenders are in the range of 30% to 40% above the university's estimate for the job. You also note that all five bids have been forwarded from the same firm of accountants which is acting for all five bidders. You also notice some remarkable similarities in the layout, lineitem pricing and wording of the bids.
This suggests there has been coordination of bidding amongst the tenderers, amounting to a breach of this provision and potentially the new cartel conduct provisions. Review the tender submissions carefully and note your concerns on file. Ask the accountant about their role in acting for all five bidders. Discuss your findings and concerns with Legal Services, which may then wish to consider reporting the matter to the ACCC. You may need to also consider approaching some additional firms and repeating the tender process.
Resale Price Maintenance
Batman University publishes a widely read journal, which it supplies to various subscribers and bookshops. The recommended retail price suggested by the editors is $10.00. Representatives of the University make it clear that the journal must not be sold at a discount, and that the University may cease to supply copies to anyone who sells for less than the RRP.
The University and the employees who negotiated this arrangement would be engaging in resale price maintenance, which is illegal.
Third Line Forcing
Example 1
Currajong University has a large and successful School of Nursing. All its nursing students are required to buy lab coats. The School, trying to help its students with the cost of study, negotiates a large discount with Acme Protective Wear Pty Ltd. The discount is given on the basis that all nursing students buy their coats from Acme.
The University, Acme and staff involved in negotiating the discount have engaged in third line forcing, which is illegal.
Example 2
As part of their outdoor education course, all students are required to learn abseiling. The University organises for all the students to be taught by one company, Mountain Adventures. Students pay their own fees for the abseiling weekend. One student wants to learn abseiling from another company, but is not permitted to do so. This is illegal.
Collective boycotts
Example 1
Barton University and Currajong College both breed and supply native plants to various landscapers, local Councils, nurseries and other buyers. One landscaping company, one they both deal with, is always late with payment. The University and the College agree that they will both change their payment terms to COD.
There would be no problem if the University and the College reached the same decisions independently, as a result of their own experiences with the landscaping company. But their agreement is not legal, even though it seems it was for a good business purpose.
Example 2
The Vice-Chancellors of Batman, Bairnsdale and Barton universities regularly meet to discuss educational matters. After the Government reduces funding by 20%, they commence discussions about possible efficiency savings. At one meeting, the Vice-Chancellors agree to rationalise operations. They allocate the more vocationally oriented engineering students to Batman and the purely theoretical engineering students to Bairnsdale. Barton University agrees to discontinue its engineering programs in exchange for a greater presence in the growing market for legal education.
This is a market sharing agreement between competitors. It could be illegal under more than one provision of the Trade Practices Act, including this one and the new cartel conduct provisions.
It may, however, be sensible from an efficiency and effectiveness viewpoint for the universities to seek to have such an agreement legitimised by an approach to the ACCC for authorisation. Contact Legal Services for more information.
Misleading Statements
Example 1
A well-known footballer has done a degree in your faculty, and your information brochure for 2002 has a picture of him on the front. You did not obtain his permission before using the photograph.
This is a misleading statement because readers might think the sportsman is endorsing your faculty. The footballer himself would certainly have grounds to complain about the unauthorised use of his image.
Example 2
You advertise a postgraduate course, which includes a stint of work experience. When the course starts, a student complains that she thought you were organizing the placement but, in fact, you require students to find their own places.
The relevant paragraph of the newspaper advertisement read:
"This intensive, 11-month course provides comprehensive management training in the changing Asian business context. A further three months are spent in an overseas placement with a leading company honing management skills and building the international networks essential for doing business in the region."
This was an issue in a real case. The judge decided that the advertisement:
"was ambiguous. It did not make clear who was to be responsible for organizing the 'overseas placement with a leading company'. It is, in my opinion, clearly plausible that a potential applicant for admission to the Program might have gained the impression from the advertisement that the [University] would be responsible for organizing a placement in a leading company for every applicant admitted to the Program".
Example 3
The University inserts an advertisement for a vacant position stating that a particular benefit, such as a car, will accrue to the successful applicant. After accepting the position, the successful application finds that he or she is given the benefit only by way of salary sacrifice and not as an additional benefit.
Example 4
The University has a brochure which contains information for prospective overseas students. The brochure states that the University is located "in close proximity to the centre of the city".
An overseas student enrols at the University. He has organised part-time work at his uncle's business in the city centre. He discovers that it will take him over an hour to reach the city by public transport, and that it will be impractical for him to keep his part-time job.