ACCC V Liquorland

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1) Identify aspects of ‘competition’ within the meaning of competition law.
The Harper Review defined competition as ‘the process by which rival businesses strive to maximise their profits by developing and offering desirable goods and services to consumers on the most favourable terms’. The purpose of competition policy is therefore to protect, enhance and extend competitive conduct. Competition Law aims to combat certain anti-competitive practices that interfere with the efficiency of markets to the detriment of both consumers and other suppliers.
Competition law is not intended to protect competitors per se (Harper Review); rather, as per Joseph Schumpeter, competition facilitates creative destruction as old and inefficient economic
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It is necessary to consider to what extent consumers are willing to travel to seek alternative sources of the goods offered by the hypothetical monopolist. In ACCC v Liquorland, the Federal Court considered to what extent people would be willing to travel to obtain alternative sources of alcohol. The court concurred with the views of the ACCC, holding that people would generally only be willing travel between 2 to 5 kilometres from a given Liquorland store to seek alternatives. Drawing an analogy with that case, given that people buy milk regularly and, despite a 5-10% price, it is not particularly expensive, people would only be willing to travel around 2-5 kilometres from their usual place of shopping to obtain alternative sources. Therefore, the relevant market from the perspective of final consumers would consist of their usual supermarket/grocer and those in the nearby suburbs (eg: St Lucia, Toowong,…show more content…
The Parmalat Australia website suggests that its brand Pauls is the most consumed branded milk in Australia. Parmalat is a significant producer of UHT milk; however, the majority of this is exported to the Asia Pacific. UHT milk accounts for less than 10% of total milk sales in Australia. Fonterra and the Murray Goulburn group have a similar market share to Parmalat, thereby constraining its market power. Lion Pty Ltd is the industry leader with a 32% market share, however this covers several brands and also includes private label contracts with Woolworths. The fact that the major suppliers operate nation-wide and would be present in each market (as discussed above), significantly limits Parmalat’s ability to exploit its market power. It is difficult to envisage Parmalat partaking in exclusive dealings or predatory pricing to the detriment of its competitors, given that they have similar resources and would be capable of rebuffing these tactics. Nevertheless, if Parmalat colludes with another supplier, then the combined market share of the firms would be substantial, thus creating scope for cartel behaviour that is disadvantageous to farmers (primary
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