Deck 12: Dealing With Competitors

Question 1

A business that takes steps or makes an agreement that is designed to maintain or control the price of goods is engaging in:

A)price fixing.
B)price inflation.
C)boycotting.
D)price leadership.

Answer 1

A

Question 2

What is a 'secondary boycott'?

A)A situation that occurs when two or more business put pressure on a third business (which they have no dispute with) in order to encourage it not to deal with a fourth 'target' business that is the subject of the boycott.
B)Any action by a business that prevents or is intended to prevent another business selling goods in the market.
C)A per se offence under the Competition and Consumer Act 2010 (Cth).
D)Conduct that is promoted in order to increase competition and fair play in the marketplace.

Answer 2

A

Question 3

The Trade Practices Tribunal described a market as having five different dimensions that it will consider when determining whether or not that market is competitive.It identified one of these dimensions as being the most crucial.Which is it?

A)The number and size distribution of different sellers and the degree of market concentration.
B)Barriers to entry (i.e.the ease with which new businesses can enter and secure a valuable part of the market).
C)The existence of extreme product differentiation and promotion.
D)The character of vertical relationships with consumers and suppliers.

Answer 3

B

Question 4

What is a 'per se offence' under Part IV of the Competition and Consumer Act 2010 (Cth)?

A)An offence arising from conduct that is criminal.
B)An offence arising from conduct so obviously anti-competitive that it is prohibited outright.
C)An offence arising from conduct that is designed to foster rivalry and competition and is therefore patently inequitable.
D)An offence that arises out of conduct that in a particular case will lead to a substantial lessening of competition in the workplace.

Question 5

The prohibition of misuse of market power under the Competition and Consumer Act 2010 (Cth) is not designed to:

A)stop a business from having substantial market power.
B)stop a business from misusing its market power.
C)stop a business from misusing its power in a way that will adversely affect competitive processes.
D)prevent predatory pricing.

Question 6

The role that was once performed by Price Surveillance Authority ('PSA') is now undertaken by the Australian Competition and Consumer Commission ('ACCC').That role is:

A)to monitor corporations.
B)to reduce competition in the marketplace to ensure that consumers get the best prices.
C)to monitor prices in areas where competition is not effective to protect consumers and ensure efficient prices
D)to promote mergers, acquisitions and monopolies in the marketplace and ensure that all businesses are treated equitably.

Question 7

There were three important changes to the law introduced by the Competition Policy Reform Act 1995 (Cth).Which of the following is not one of them?

A)It extended the scope of the Trade Practices Act 1974 (Cth) to all Australian businesses and professions.
B)It merged the Trade Practices Commission and the Prices Surveillance Authority to form the Australian Competition and Consumer Commission.
C)It established an access regime to allow third parties access to essential facilities.
D)It set up the office of the Consumer Ombudsman.

Question 8

According to the ACCC, a misuse of market power by a business is generally not the type of conduct that:

A)raises the costs of entry into the market.
B)adversely affects the competitive process in the market.
C)adversely affects consumers in terms of price, quality availability choice or convenience.
D)can be explained in terms of efficiency or genuine commercial rivalry.

Question 9

A few years ago anti-trust proceedings (proceedings for uncompetitive conduct) were brought against Microsoft in the USA.The company was alleged to have abused its monopoly in the desktop operating systems market.The Court decided that:

A)there was ample and adequate scope for any potential competitor to develop a viable alternative to Windows
B)there was a 'barrier to entry' that made it prohibitively expensive for a potential competitor to develop into a viable alternative to Windows.
C)Microsoft had a healthy monopoly that delivered an effective and cost efficient product to consumers.
D)it was expensive but viable for potential competitors to develop an alternative to Windows and therefore the market was sufficiently competitive.

Question 10

Which of the following types of secondary boycotts will contravene The Competition and Consumer Act 2010 (Cth)?

A)The dominant purpose of the boycott is substantially related to creating a monopoly in the marketplace.
B)The dominant purpose of the boycott is substantially related to environmental or consumer protection.
C)The dominant purpose of the boycott relates to work related issues (e.g.remuneration, working hours)
D)The target of the boycott is the employer of the boycotters.

Question 11

Which of the following is not a per se offence under the Competition and Consumer Act 2010 (Cth) and is therefore not prohibited unless it has the effect of substantially lessening competition?

A)Primary boycotts.
B)Secondary boycotts.
C)Price fixing.
D)Resale price maintenance.

Question 12

The difficulties of establishing the extent of a particular 'market' under Part IV of the Competition and Consumer Act 2010 (Cth) are numerous.This is because:

A)the economy is divided into a large number of discrete markets.
B)trading activities cannot be neatly fitted into clearly defined markets.
C)the outer limits of particular markets are very clear but are different in scope from one another.
D)one market tends not to overlap another.

Question 13

ASIC cannot authorise:

A)price fixing.
B)an agreement that lessens competition.
C)a misuse of market power.
D)a boycott or merger.

Question 14

Which of the following cannot be authorised by ASIC?

A)Misuse of market power.
B)Price fixing.
C)A prohibited merger.
D)An agreement that lessens competition.

Question 15

Sonny (Australia) Ltd, a manufacturer of electronic goods, has been found to have engaged in resale price maintenance in breach of Part IV of the CCA.Which of the following is not a possible consequence?

A)An injunction prohibiting Sonny from engaging in such conduct in future.
B)An order that Sonny pay compensation to its customers.
C)A fine.
D)A criminal penalty.

Question 16

The Competition and Consumer Act 2010 (Cth) prohibits 'exclusive dealing'.Exclusive dealing occurs when:

A)Two or more business put pressure on a third business with which they have no dispute in order to encourage it not to deal with another targeted business.
B)A business imposes restrictions on the capacity of another business to choose where and from whom it buys products.
C)A business takes action that prevents or is intended to prevent another business selling goods in the market.
D)There is an exclusionary provision in a business contract between competitors.

Question 17

What is the correct name for the type of actions that are only prohibited under the Competition and Consumer Act 2010 (Cth) Part IV if they have the effect of substantially lessening competition?

A)Per se offences.
B)Conditional offences.
C)Strict offences.
D)Contingent offences.

Question 18

While the Competition and Consumer Act 2010 (Cth) does not comprehensively define a 'market', the Courts usually accept the wide definition of a market as:

A)the area of close competition or field of rivalry between businesses.
B)a public gathering held for buying and selling merchandise.
C)the group of consumers or organisations that are interested in product.
D)the business of buying or selling a specific commodity.

Question 19

The ACCC is closely monitoring competition in the Australian wine industry.Which of the following factors is least likely to be emphasised by the ACCC in determining whether or not the wine market in Australia is competitive?

A)The number of wine producers in Australia.
B)The volume of wine consumed in Australia.
C)The cost and barriers to becoming a wine producer in Australia.
D)The arrangements that exist between wine producers in Australia.

Question 20

In determining whether conduct by a business has the effect of substantially lessening competition, which of the following issues need not be considered?

A)Whether there is a relevant market.
B)Whether the conduct did or was likely to lessen competition in the market.
C)Whether the purpose of the conduct was likely to lessen competition.
D)Whether competition within the market is a desirable goal.

Question 21

Smash walks into the supermarket looking for a soft drink.Looking at the shelf, he sees Coca-Cola, Sprite, 7-Up, Pepsi, and Fanta.This range is indicative of which dimension of the soft drink market?

A)Temporal dimension
B)Functional dimension
C)Geographic dimension
D)Product dimension

Question 22

Which Act regulates competition in Australia?

A)Competition Regulation Act 2001 (Cth).
B)Monopolies Act 1986 (Cth).
C)Trade Practices Act 1974 (Cth).
D)Competition and Consumer Act 2010 (Cth).

Question 23

Authorisation under the Competition and Consumer Act 2010 (Cth) Part IV is:

A)an administrative procedure whereby a business notifies the ACCC about an action that would otherwise be a contravention of the CCA and attains immunity from civil proceedings.
B)an administrative procedure whereby the ACCC authorises conduct that would otherwise be a contravention of the CCA, on public benefit grounds
C)a judicial procedure in which the Court authorises conduct that would otherwise be a contravention of the CCA on legal grounds.
D)a judicial procedure in which the Court gives the notifier immunity from civil proceedings in respect of action that would otherwise be a contravention of the CCA.

Question 24

Conduct that amounts to full line forcing and third line forcing is prohibited by the Competition and Consumer Act 2010 (Cth).Which of the following statements is not true?

A)Both kinds of conduct are prohibited only if they have the effect of substantially lessening competition in the marketplace.
B)Both kinds of conduct are forms of exclusive dealing.
C)Both kinds of conduct have the effect of imposing restrictions on another's freedom to choose where from whom and how they buy products.
D)Both kinds of conduct occur when a business makes the supply of its products conditional upon a customer also purchasing the products of another business.

Question 25

Melissa and Janet are retail florists in the same town.Farm Fresh Flowers is a new flower farm that has opened in the town.Which of the following is an example of a secondary boycott?

A)Melissa and Janet threaten not to purchase from their long time wholesaler Nancy unless Nancy agrees not to supply her flowers to Farm Fresh Flowers.
B)Melissa and Janet threaten not to purchase any flowers from Farm Fresh Flowers.
C)Melissa and Janet threaten to tell all their customers that Farm Fresh Flowers only sells wilted and dried flowers.
D)Melissa and Janet threaten to never speak to the owners of Farm Fresh Flowers.

Question 26

Which of the following functions is not carried out by the ACCC?

A)Monitoring prices in areas where effective competition is not sufficient to protect consumers.
B)Authorising prohibited practices where public benefit outweighs public detriment.
C)Determining whether certain conduct substantially lessens competition in a market.
D)Monitoring compliance with the Corporations Law.

Question 27

Are mergers and acquisitions prohibited by the Competition and Consumer Act 1010 (Cth)?

A)Yes, both are prohibited.
B)Acquisitions are, but mergers are not.
C)Mergers are, but acquisitions are not.
D)Both are prohibited if they would have the effect of reducing competition in the market.

Question 28

Which of the following is most likely to be an agreement that lessens competition in breach of CCA Part IV?

A)The only two pencil manufacturers in Australia agree to help each other maintain their respective shares of the pencil market.
B)The only two eraser manufacturers in Australia agree to cooperate to conduct research into new eraser technology.
C)The only two pen manufacturers in Australia agree to jointly set up a factory in China.
D)The only two ruler manufacturers in Australia agree to manufacture plastic rulers instead of wooden rulers.

Question 29

Which of the following is least likely to be price fixing in breach of CCA Part IV?

A)Competing businesses agreeing to set the same discounts.
B)Competing businesses agreeing to increase their prices.
C)Competing businesses agreeing to use a particular formula to set prices.
D)Competing businesses agreeing to share information about their customers.

Question 30

In May 2020, Kiki's Nail Bar opens on High Street.Her shop is an instant hit because Kiki offers manicures for $5 a session, significantly cheaper than her competitors on that street whose manicures are $50 a session.In 2010, after a secret meeting with some other shop owners, Kiki suddenly raises her prices to $30 a session, and other shops simultaneously lower their prices to $30 a session.This is most likely an example of:

A)price fixing.
B)resale price maintenance.
C)misuse of market power.
D)a primary boycott.

Question 31

The fines payable for breaches of Part IV of the Competition and Consumer Act 2010 (Cth) are:

A)civil.
B)criminal.
C)determined based on a criminal standard of proof.
D)determined by reference to the standard of proof of a reasonable person.

Question 32

Madam Marple bakes extremely popular cookies that she sells to various cafes.She does not want people to think her cookies are of a poor quality, so she sells her cookies on the condition that the cafes not sell her cookies to customers for less than $5 a cookie.This is an example of:

A)a primary boycott.
B)misuse of market power.
C)price fixing.
D)resale price maintenance.

Question 33

Allie owns the largest chain of spa centres in Sydney.Whenever a new spa centre opens within 100 m of one of her centres, Allie drops her prices to less than cost in order to ensure that no one chooses to use the new centre.Allie appears to be engaging in:

A)a primary boycott.
B)a secondary boycott.
C)third line forcing.
D)misuse of market power.

Question 34

Tom and Rey both own supermarkets.One of the products that they sell in their supermarkets is milk.Which of the following is an example of a primary boycott?

A)Tom and Rey agree to both buy milk from Brown Cow Farm.
B)Tom and Rey agree to both stop buying milk from Black and White Cow Farm.
C)Tom and Rey agree to both stop buying milk because of mad cow disease.
D)Tom and Rey agree to both stop drinking milk.

Question 35

Bruno and Steph each operate petrol stations along the Great Ocean Road in Victoria.They are the only petrol stations for hundreds of miles along the road.Which of the following agreements between them is most likely to substantially lessen competition?

A)An agreement to pool some money together to erect barriers along a particularly dangerous stretch of the road.
B)An agreement to buy coffee from the same supplier.
C)An agreement to sell motor oil at the same price.
D)An agreement to sell the same brand of muffins from their convenience stores.

Question 36

The Competition and Consumer Act 2010 (Cth) contains two tests that must be satisfied if the ACCC is to authorise anticompetitive conduct.In the case of authorisation of exclusive dealing (other than third line forcing) or anti-competitive conduct the test that must be satisfied is:

A)the conduct is likely to result in a public benefit that outweighs the public detriment.
B)the conduct will result in a public benefit that is substantial when considered against the likely detriment.
C)the conduct will improve economic efficiency.
D)the conduct will substantially increase the wellbeing of members of the community.

Question 37

What is predatory pricing within the context of the Competition and Consumer Act 2010 (Cth)?

A)Fixing, controlling or maintaining the price of goods.
B)Charging unrealistically low prices to try to force competitors out of the market.
C)Refusing to supply a product unless the buyer agrees to not to buy or resupply products of a competitor.
D)Refusing to supply a product to a buyer unless the buyer fixes a minimum price below which the product cannot be sold.

Question 38

Which of the following is not a necessary element of third-line forcing in breach of CCA Part IV?

A)There is one product the buyer desires and another product that is forced upon them.
B)At least four parties are involved.
C)The buyer cannot purchase the desired product without also purchasing the third party's product.
D)The conduct has the effect of substantially lessening competition in the market.

Question 39

Which of the following is least likely to be price fixing in breach of CCA Part IV?

A)Competing petrol stations increase their petrol prices to the same amount at exactly the same time.
B)Competing supermarkets discount their bread at the same time every day.
C)Competing car rental companies simultaneously stop offering certain discounts.
D)Competing surf shops agree to only discount their surfboard rental fees at certain times of day.

Question 40

The concept of 'exclusive dealing' in the Competition and Consumer Act 2010 (Cth) does not encompass:

A)conduct that occurs when a business imposes restrictions on what, where and from whom a buyer/supplier is free to purchase.
B)full line forcing.
C)parallel importation.
D)third line forcing.

Question 41

Morgan and Stanley are the owners of the two largest nail manufacturing businesses in Western Australia.Morgan and Stanley decide to merge to form a single business to take advantage of the economies of scale.In which of the following scenarios is the merger least likely to be objected to by the ACCC?

A)The merged business will be able to sustain significantly reduced prices that undercut smaller businesses for at least a year.
B)The merged business will have a 65% market share; more than triple the market share of its nearest competitor.
C)The merger will lead to an overall drop in the price of nails for consumers.
D)The merger will result in substantial job losses for the employees of both companies.

Question 42

Sonny (Australia) Ltd is a manufacturer of electronic goods.Which of the following is an example of resale price maintenance?

A)Three retailers agree to sell all Sonny goods at 50% more than cost price.
B)Sonny refuses to supply its goods to any retailer who engages in loss leading.
C)Sonny supplies its goods to retailers on the condition that they do not sell the products below the prices set by Sonny.
D)Sonny refuses to supply its goods to a particular retailer after they breach a condition not to sell Sonny products above a fixed price.

Question 43

Tom and Jack are competing suppliers of hair care products.Mary runs a hair salon and wants to sell hair care products at her salon.Which of the following is an example of exclusive dealing?

A)Tom sells his hair care products to Mary on the condition that Mary does not purchase similar hair care products from Jack.
B)Mary buys hair care products from Tom but does not buy products from Jack because his products are more expensive.
C)Tom sells his hair care products to Mary telling her that his products are superior to Jack's hair care products and as a result Mary does not purchase hair care products from Jack.
D)Mary promises to only buy hair care products from Tom if he will sell her his products at half the price Jack is offering for his products.