1E9Ct5D

advantage of their dominant marketposition for an anti-competitivepurpose; and(b) a business or individual specifyinga minimum price for the sale of itsgoods by another.In assessing whether competition hasbeen substantially lessened, the Courtswill consider whether other marketparticipants can compete effectively(for example by setting their ownprices, standards of quality and outputvolumes) and how hard it is for newcompetitors to enter the market.The Commerce Commission caninvestigate complaints regardinganti-competitive practices. There area number of actions it may take whereit believes the Act has been breached,including issuing warnings or bringinga prosecution in the High Court.It is possible for a business to apply foran authorisation from the Commissionto prevent any further action beingtaken, where it can show that althoughin breach of the Act, the conduct bringsbenefits which outweigh the potentialharm arising from a loss of competition.This process can however be lengthyand complex.Pricing controlsThe Act prohibits price fixingagreements between competitorswhich set the price of goods or servicesor interfere with how a price is reached.Price fixing agreements are also knownas cartels. A cartel comes into existencewhen businesses agree to act togetherfor an anti-competitive purpose,rather than competing with eachother. Price fixing affects competitionby making goods and services moreexpensive, lessening choices availableto consumers and often reducinginnovation, quality and investment.The Act specifically prohibitsany contract, arrangement orunderstanding between parties whoare in competition with one anotherwhich has the purpose, effect orlikely effect of fixing, controlling ormaintaining the price of goods orservices.Types of prohibited agreementsinclude:(a) price fixing: agreements whichset a minimum price, eliminate orreduce discounts, adopt a formulato calculate price, or increase ormaintain prices;(b) bid rigging: agreements betweencompetitors as to who should win abid. The effect of such agreementsis that consumers are unawarethat these bidders are not actuallycompeting with each other to offerthe lowest price;(c) market sharing: where competitorsagree to divide up markets betweenthemselves (for example allocatinggeographical regions, products orcustomers to each other); and(d) output restrictions: wherecompetitors agree to limit orlessen the output of certaingoods or services so as to limitproduction, and then maintainingor increasing prices.Some exceptions to price fixingarrangements apply under theAct, including where two or morebusinesses are in a joint venture orthere is a partnership arrangementbetween individuals.20