Exclusive Dealing Under The Trade Practices Act - Ebay's Application For Immunity Rejected By The ACCC

In a timely reminder that the grant of immunity for

exclusive dealing conduct which would otherwise be a breach of

the Trade Practices Act is not necessarily a foregone

conclusion, the Australian Competition and Consumer Commission

(ACCC) recently issued a draft determination

rejecting eBay's application for immunity in respect of its

proposed requirement that users of its on-line marketing

facility make and receive payments through accounts held with

its related company, PayPal.

Background

eBay operates a website in Australia through which the sale

and purchase of goods can be transacted by members of the

public. It currently allows sellers to nominate a number of

payment options on the site. PayPal operates a secure on-line

payment service by which members conduct financial transactions

with one another over the internet without the need to provide

the other party with specific financial information such as

bank account details.

In April 2008 eBay lodged a 'notification' with the

ACCC seeking immunity for a proposal to require, as a condition

of use of the services on its site, that users and sellers

conduct the financial aspects of their transactions using

PayPal accounts (Conduct).

Exclusive Dealing

The Conduct which eBay sought to notify is a form of

exclusive dealing known as third line forcing. It occurs where

one party supplies or offers to supply its goods or services on

condition that the acquirer also acquires goods or services

from a particular third party. Such conduct is a "per

se" breach of section 47 of the Trade Practices

Act, in that no substantial lessening of competition need

be established for a breach to occur.

A party can obtain immunity from prosecution for exclusive

dealing by notifying the conduct to the ACCC. Immunity will be

automatically conferred 14 days after the date of the

notification unless the ACCC determines that the claimed public

benefits of the conduct do not outweigh its anti-competitive

detriment.

The eBay notification

For a large range of conduct constituting exclusive dealing

(including third line forcing) the grant of immunity is

infrequently opposed by the ACCC. Such was not the case in

respect of the eBay notification.

Although eBay claimed significant public benefits would

arise from the Conduct, which were largely related to reducing

what eBay calls 'Bad Buyer Experiences', the ACCC

investigated the matter and decided on 12 June 2008 to revoke

the immunity which would otherwise have...