anti competitive behaviour

Question 1

what does anti competitive behaviour mean

Answer 1

any agreements or arrangements between firms that seek to restrain competition and the regulation competitive markets achieve

Question 2

what is the benefit of competition

Answer 2

motivation to improve performance, innovate, lower price and offer more choice for consumers, efficiency, employment

Question 3

why do some firms want market power

Answer 3

to reduce market business competition

reducing price competition (they can set high prices)

Question 4

what are the 8 business practices that reduce competition and that are illegal

Answer 4

1. cartels
2. collusive tendering
3. resale price maintenance
4. mergers
5. market sharing
6. predatory pricing
7. collective boycott
8. exclusive dealing

Question 5

explain illegal business practice: cartels

Answer 5

when firms agree to collude (reduce comp, increase profit) instead of competing, includes price fixing and market sharing

Question 6

explain illegal business practice: collusive tendering

Answer 6

firms agree to submit high bids which ensure high profits and the sharing of work

Question 7

explain illegal business practice: resale price maintenance

Answer 7

suppliers set a min price which a retailer must sell the product at and can refuse to sell if retailer sells the product at a discount

Question 8

explain illegal business practice: mergers

Answer 8

2 or more firms join to form one

prohibited if it reduces competition a LOT

Question 9

explain illegal business practice: market sharing

Answer 9

market divided into smaller markets, each supplied by one of the firms -> reduces competition

Question 10

explain illegal business practice: predatory pricing

Answer 10

when a firm sets price very low in order to damage/eliminate equal competition

Question 11

explain illegal business practice: collective boycott

Answer 11

when a group of competitors agree to not get or supply goods to a business that they are negotiating with

Question 12

explain illegal business practice: exclusive dealing

Answer 12

when a firm trading with another imposes restrictions on their freedom (who/where they deal)

Question 13

how does gov policy prevent market power and these anti competitive behaviours (ACCC)

Answer 13

gov policy is used to address and prevent market power through interventions and the ACCC (the aus comp and consumer commission)

Question 14

what does the ACCC do

Answer 14

improves efficiency of the market by protecting competition and makings laws against anti competitive behaviour

Question 15

by prevent market behaviour could the ACCC unintentionally restrict competition through their regulation (what regulations limit comp)

Answer 15

YES - limit of number/type of business, limit firms ability to compete, reduce incentive to compete, limit choice/info available to consumers

Question 16

what are 2 examples (case study) of a penalty the ACCC put in place

Answer 16

1. Visy (2008
   fined $36 million by Fed Court for overcharging firms/consumers through its cardboard packaging cartel
2. Colgate/Palmolve (2016)
   fined $18 million for colluding with rival companies to fix detergent price in shops

Question 17

what is an example of when the ACCC accidently reduced competition through regulation and the answer to this

Answer 17

Taxi Market - gov made it very expensive to get a taxi license
the regulation restricted comp, increased prices as service quality fell
the answer = deregulation

Question 18

what is the competition and consumer act of 2010

Answer 18

made by ACCC
contains rules against anti comp conduct to ensure fair comp
protects consumer law