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Flashcards in anti competitive behaviour Deck (18)
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1

what does anti competitive behaviour mean

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

2

what is the benefit of competition

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

3

why do some firms want market power

to reduce market business competition
reducing price competition (they can set high prices)

4

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

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

5

explain illegal business practice: cartels

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

6

explain illegal business practice: collusive tendering

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

7

explain illegal business practice: resale price maintenance

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

8

explain illegal business practice: mergers

2 or more firms join to form one
prohibited if it reduces competition a LOT

9

explain illegal business practice: market sharing

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

10

explain illegal business practice: predatory pricing

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

11

explain illegal business practice: collective boycott

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

12

explain illegal business practice: exclusive dealing

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

13

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

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

14

what does the ACCC do

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

15

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

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

16

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

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

17

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

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

18

what is the competition and consumer act of 2010

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