PACC6009 Business Law And Law Management

Dealing with Competitors

Tracey, Matthew and Ben all run large natural supplements supply businesses in Adelaide – “Valley Supplements”, “Supplements R Us” and “Take your Supplements”. For the last decade they have had an arrangement under which they each agree to only supply retailers in particular geographic areas of Adelaide. If a new retailer approaches them from outside their assigned area, they have each committed to advise this retailer to take their business to the supplier ‘assigned’ to that area. If this advice isn’t followed, the beneficiary of this new business will compensate the supplier assigned to the new retailer’s area.

A few months ago a new natural supplements supply business, “Free from Big Pharma”, opened in Adelaide. “Free from Big Pharma” runs a highly efficient business, delivers high quality products at low prices and has employed an effective social media marketing strategy. As a result, “Free from Big Pharma” has been successfully taking business away from Valley Supplements, Supplements R Us as well as Take your Supplements.

Tracey, Matthew and Ben meet one Friday evening after work at their favourite Thai restaurant in Norwood to discuss the threat posed by “Free from Big Pharma”. They agree that they will lose a lot of money if “Free from Big Pharma” continues to grow and decide to do something about it. By the end of their dinner they have decided to discreetly approach key retailers to inform them that if they stock (or continue to stock) anyproducts from “Free from Big Pharma”, then Valley Supplements, Supplements R Us or Take your Supplements will no longer supply them with supplement products.

Cresilda owns a small supplements shop in Stirling. She has always stocked supplements from Valley Supplements, and has recently been stocking supplements from “Free from Big Pharma” as well. She is concerned when Tracey (from Valley Supplements) tells her that she now has to choose between the two suppliers.

(a)  Advise Cresilda as to the legality of Tracey’s conduct under the Competition and Consumer Act 2010 (Cth). (15 Marks)

(b)  Also consider what kind of legal actions might be available to the ACCC if they took an interest in this case. (15 Marks)