Price maintenance may occur when a supplier prevents a customer from selling a product below a minimum price by means of a threat, promise or agreement. It may also occur when a supplier refuses to supply a customer or otherwise discriminates against them because of their low pricing policy. Section 76 of the Competition Act deals with price maintenance.
For the Act to apply, the following requirements must be met:
- A supplier, by means of a threat, a promise or an agreement, influences upward, or discourages the reduction of, the prices charged or advertised by another business that is either a customer of that supplier, or a competitor.
- A supplier refuses to supply a product to, or discriminates against, another person because of that other person's low pricing policy; and/or
- Any person, as a condition of doing business with a supplier, induces that supplier to refuse to supply a product to another person because of that other person's low pricing policy; and
- The conduct described above has had, is having or is likely to have an adverse effect on competition in a market.
Where appropriate, the Commissioner will open discussions to obtain voluntary compliance. A more formal solution would involve the registration of a consent agreement with the Competition Tribunal. If voluntary compliance cannot be achieved, the Commissioner may file an application before the Tribunal for an order to remedy the situation. The Tribunal may issue an order requiring the price maintenance conduct to stop or requiring the supplier to accept the customer who was refused supply.
The Act allows a person to apply directly to the Tribunal for a hearing when it believes that the actions of a supplier meet all the requirements of the price maintenance provisions.
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