A turf breeder has found itself the subject of an ACCC investigation and undertaking aimed at weeding out whether it engaged in concerted practices that substantially lessened competition in the greater Sydney turf market.
Lawn Solutions Australia Group (LSA) develops, licenses and markets a number of popular instant turf products. Those products include the popular Sir Walter Turf variety to which some of the conduct relates.
The undertaking states that LSA circulated price surveys to growers and sellers and issued requests insisting that they adhere to the benchmark prices recommended by LSA (RRP) and/or stop discounting LSA turf to below the benchmark. LSA also contacted a rival turf breeder on a number of occasions about their prices, from which it can be inferred that LSA was seeking to discourage its rival from setting lower prices.
Softening competitive tensions, avoiding “a turf war”
A concerted practice is one in which two or more business co-operate in substitute for the uncertainty of competition. The practice is prohibited by section 45 of the Competition and Consumer Act 2010 (Cth) when it has the purpose, effect or likely effect of substantially lessening competition. Practically, it often involves the exchange of strategic commercial information between at least two other independent firms (such as pricing information) which in the circumstances facilitates an alignment of their behaviour and ‘softens’ the competitive tension between them.
Perhaps in fear of becoming a tall blade of grass, LSA has provided the ACCC with a court-enforceable undertaking. The undertaking:
- acknowledges that its conduct had the capacity to cease discounting and to suppress or hinder price competition in the greater Sydney turf market,
- includes moratorium on communicating certain retail pricing information to LSA growers and resellers, and
- implements a compliance training program.
The case is a timely reminder of the risks presented by the disclosure of sensitive pricing information between competitor businesses, especially within networks of suppliers and sellers, with conduct that may substantially lessen competition a continuing focus and potentially fertile ground for regulatory intervention by the ACCC.
The LSA investigation is the first known alleged concerted practices investigation resulting in an enforceable undertaking since two roofing companies took to a Facebook group to express their elation at the 2019 Sydney Hailstorms creating the ‘perfect opportunity’ to increase prices. That investigation was also resolved by undertaking.