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Question 1

Bait advertising

Answer 1

Bait advertising : where a shop advertises a good for sale to lure customers to the store, but they have insufficient quantities of the good to sell. They will then re-direct customers to other goods at the store.

Question 2

Exclusive dealing

Answer 2

Exclusive dealing occurs when one person trading with another imposes some restrictions on the other’s freedom to choose with whom, in what, or where they deal.
This commonlyoccurs when a business will only supply goods or services, or give a particular price or discount on the condition that the purchaser buys goods or services from a particular third party. If the buyer refuses to comply with this condition, the business will refuse to supply them with goods or services

Question 3

Predatory pricing

Answer 3

Predatory pricing is one way in which a business may misuse its market power. Predatory pricing occurs when a company with substantial market power or share of a market sets is prices at a sufficiently low level with the purpose of damaging or forcing a competitor to withdraw from the market. This conduct is illegal.

Question 4

Price fixing

Answer 4

It is illegal for competitors to work together to fix prices rather than compete against each other. This conduct restricts competition, and can force prices up and reduce choices for consumers and other businesses.
Price fixing agreements do not have to be formal; they can be a ‘wink and a nod’, made over a drink in the local pub, at an association meeting or at a social occasion. The important point is not how the agreement or understanding was made or even how effective it is, but that competitors are working out their prices collectively and not individually.

Question 5

Miss use of market power

Answer 5

Abusiness with a substantial degree of power in a market is not allowed to use this power for the purpose of eliminating or substantially damaging a competitor or to prevent a business from entering into a market. This behaviour is referred to as ‘misuse of market power’.
If a business has market power they can effectively set price. For example, if McDonald’s went to Tasmania to buy potatoes for their french fries, and used their power to set the price of the potatoes below the farmer’s price.

Question 6

Resale price maintenance

Answer 6

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.