Vertical agreements

Special rules and exemptions

Do any special rules or exemptions apply to the assessment of anticompetitive agreements between undertakings active at different levels of the supply chain in digital markets in your jurisdiction?

There are no special rules or exemptions to the assessment of anticompetitive agreements between undertakings active at different levels of the supply chain in digital markets. Section 47 of the Act generally concerns agreements between undertakings at different levels of the supply chain. Section 47 prohibits exclusive dealing, if the exclusive dealing has the purpose, effect or likely effect of substantially lessening competition. There is an anti-overlap provision within the Act to the effect that conduct which constitutes exclusive dealing within the meaning of section 47 is to be assessed based on a substantial lessening of competition standard and is conduct to which the cartel prohibitions do not apply (section 45AR of the Act).

Online sales bans

How has the competition authority in your jurisdiction addressed absolute bans on online sales in digital markets?

The ACCC has not addressed absolute bans on online sales in digital markets. Such vertical restrictions would be assessed under section 47 of the Act, and prohibited if such restrictions had the purpose, effect or likely effect of substantially lessening competition.

Resale price maintenance

How has the competition authority in your jurisdiction addressed online resale price maintenance?

There is no provision in the Act that deals specifically with resale price maintenance (RPM) online. RPM is per se prohibited in Australia whether online or otherwise (section 48 of the Act). There is an exception for genuine recommended prices (section 97 of the Act). The ACCC has been very active in enforcing the prohibition on RPM, including in relation to online markets. Most recently, in March 2021, the Federal Court ordered B & K Holdings (a wholesale distributor of cycling and sporting products) to pay a $350,000 penalty after declaring by consent that it had engaged in RPM by prohibiting its dealers from advertising certain products online below the recommended retail price (ACCC v B & K Holdings [2021] FCA 260).

Since 2017, companies have had the ability to seek notification to obtain protection from legal action for RPM, the legal test for which is whether the likely benefit from the RPM conduct would outweigh the likely public detriment. This is assessed on a case-by-case basis, and there has only been one notification in relation to online RPM, which was allowed to stand in October 2020 (HP PPS Australia notification RPN10000456).

Geoblocking and territorial restrictions

How has the competition authority in your jurisdiction addressed geoblocking and other territorial restrictions?

The ACCC has not specifically taken enforcement action in relation to geoblocking and other territorial restrictions online and has not released any specific guidelines on the issue.

In Australia, the issue of geoblocking was considered by the Productivity Commission (PC) as well as the Federal Government as part of the PC’s Inquiry into Australia’s Intellectual Property arrangements (the PC Inquiry). A final report of the PC Inquiry was released on 20 December 2016.

The ACCC submitted to the PC Inquiry that it supported the government providing clarity on the issue of geoblocking; such clarity would remove impediments to consumers accessing legitimate content and thereby promote competition (ACCC, ‘Submission to the Productivity Commission’s Draft Report into Australia’s IP Arrangements’, 6 June 2016).

Following the PC Inquiry, the longstanding exemption in the Act that carved out certain prohibitions on anticompetitive conduct for IP owners and enabled them to determine the manner in which their IP is commercialised, including through territorial restrictions, was repealed in September 2019 and the ACCC issued guidelines outlining its general interpretation of the application of the law following the repeal (‘Guidelines on the repeal of subsection 51(3) of the Competition and Consumer Act 2020’ (Cth), August 2019). Based on this, geoblocking and other territorial restrictions online are subject to the general competition law prohibitions and will be assessed on a case by case basis.

Platform bans

How has the competition authority in your jurisdiction addressed supplier-imposed restrictions on distributors’ use of online platforms or marketplaces and restrictions on online platform operators themselves?

The ACCC has generally addressed supplier-imposed restrictions on the use of online platforms and restrictions on online platform operators through its consumer protection powers under the ACL. The ACCC has taken a number of enforcement actions against comparator website operators for misleading and deceiving consumers or false or misleading representations, including against Trivago (2020), iSelect (2019), Compare the Market (2014), Energy Watch (2012) and iSelect (2007), and it has released consumer and industry guidance on the operation and use of comparator websites in 2015.

The ACCC has previously addressed selective distribution systems and other vertical supplier restrictions under the general competition prohibitions in the Act preventing conduct giving rise to a substantial lessening of competition (in ACCC v Fila Sport Oceania (2004) ATPR 41-983 and TPC v CSR (1991) ATPR 41-076), but has not done so recently in relation to online platforms.

There have been no decisions or developments in Australia in relation to platform bans specifically; however, the ACCC’s Digital Platform Services Inquiry 2020–2025 is considering (among a number of other things): the behaviour of suppliers of digital platform services in relation to pricing and other terms and conditions offered to businesses and supplier policies relating to privacy; data collection; and management and disclosure, so it can be expected that the ACCC’s approach in this area may evolve.

Targeted online advertising

How has the competition authority in your jurisdiction addressed restrictions on using or bidding for a manufacturer’s brand name for the purposes of targeted online advertising?

The ACCC has not taken any action to date in relation to restrictions on using or bidding for a manufacturer’s brand name for the purposes of targeted online advertising. The ACCC is considering as part of its Digital Advertising Services Inquiry 2020–2021 (Adtech Inquiry) the level of transparency in auction and bidding processes in online advertising and supplier behaviour (including vertically integrated suppliers offering ad tech services and ad agency services), which may be its first consideration of such restrictions. The Adtech Inquiry Interim Report considered header bidding and automated algorithms in bidding decisions and sought feedback on a number of proposals, but the ACCC has not made any recommendations to date. However, the ACCC has taken action against Google under consumer law in relation to the display of ads by advertisers which used unrelated business names or website links in the headline of sponsored links on its search results pages. The case was appealed twice and the High Court of Australia (the final court of appeal) ultimately found that the ads or links were misleading and were displayed by Google, but Google did not create them and was not responsible for their content (Google v ACCC (2013) HCA 1).

Most-favoured-nation clauses

How has the competition authority in your jurisdiction addressed most-favoured-nation clauses?

In 2016, the ACCC investigated Booking.com and Expedia in relation to the use of price and availability most favoured nation clauses (MFN) in their contracts with Australian hotels and accommodation providers. In late 2016, Booking.com and Expedia reached an agreement to amend their agreements with accommodation providers, removing narrow room rate and inventory MFNs.

With effect from 22 March 2019, Expedia voluntarily and unilaterally waived certain additional rate parity provisions in agreements with Australian hotel partners. The ACCC confirmed it had ceased its investigation into Expedia’s conduct in relation to such rate parity provisions in November 2019.

Multisided digital markets

How has the competition authority in your jurisdiction addressed vertical restraints imposed in multisided digital markets? How have potential efficiency arguments been addressed?

There is no single vertical restraints prohibition in Australia, rather the Act regulates vertical restraint conduct under the general prohibition against anticompetitive agreements and concerted practices (section 45); the prohibition on misuse of market power (section 46); the prohibition of exclusive dealing conduct and third-line forcing (section 47); and restraints on resale price maintenance (sections 48 and 96). The provisions do not directly take into account potential efficiencies; however, efficiencies or public benefits would be considered as part of an application for authorisation for conduct that would otherwise be prohibited. There are no specific provisions for, or applications of this regime to, digital markets.

Other issues

Have any other key issues emerged in your jurisdiction in relation to the application of competition law to vertical agreements in digital markets?

There are no other key issues emerging in Australia in relation to vertical agreements in digital markets.

Law stated date

Correct on

Give the date on which the information above is accurate.

5 September 2020