Home' micenet eMag : micenet October November 2015 Contents LEGAL ISSUES | MATT CROUCH
ommercially, if we price too
high, sales may drop away. If I
remember my high-school
economics correctly, that is
called “elasticity of demand”. Sell too cheaply
and we de-value our brand and miss out on
Getting prices right commercially is very
hard and we need to know what our
competitors are charging if we are not to
price ourselves out of the market.
In my experience, one of the nicest things
about being involved in the meetings and
events sector is that event managers, PCOs
and the suppliers to the industry are
uncommonly great people (I mean they are
usually very nice!). They get together at
functions like the MEA National Conference
(congrats to MEA btw on Hamilton Island!)
and they talk nicely to each other.
Minimal bitchiness, jealousy and nasty
And in such jovial company, a business
person can get around to talking about
things. It starts with “How’s business?” and
sometimes the discussion wanders onto a
subject that is potentially very dangerous
indeed – pricing.
The Competition and Consumer Act 2010
(Cth) makes it an offence for a business to
enter into a contract, arrangement or
Matt Crouch says pricing is one of the most difficult things to get right.
understanding that fixes price, or any aspect of price. While many business people might be
savvy enough not to enter into a formal agreement with a competitor about price, many do not
know that the law prohibits arrangements and understandings too; the so-called “wink and a
So... if you get around to discussing prices with a competitor, and subsequently your pricing
falls into line with your competitor’s pricing, you may be in for a world of pain. You might be
guilty of a cartel offence, fines potentially exceeding $10 million and even gaol.
Now you will all be thinking: “How can I set my prices if I cannot discuss prices with a
competitor? How can I know what is acceptable in the market?” Well, it is one thing to find out what
competitors are charging; but it is quite another to swap information on prices with competitors.
Others of you (or maybe the same ones) are thinking: “But merely swapping information is not
forming a contract arrangement or understanding to fix our prices!” – and you’d be right – but
there is a fine line and a real danger in even discussing prices when the law also prohibits
“arrangements and understandings”.
My routine advice to all clients is NEVER EVER discuss prices with competitors. In the Geelong
petrol case the ACCC lost in its prosecution of petrol companies because it could not prove that,
although the petrol companies went to a lot of trouble to find out each other’s prices, there was no
actual “deal” – ie no contract arrangement or understanding that they would each set prices
accordingly. A pity, really, since we all suspect that something is amiss with petrol pricing...
But you see my point. Unless you have a really, really big budget (really!) to fight the ACCC in
court, you’d really (really!) rather “not go there” as the vernacular has it.
All it takes is for someone to overhear your discussion with the competitor and if that
someone is not, shall we say, a friend... and a report is made to the ACCC an investigation and
perhaps prosecution could commence. Perhaps an ex-employee with an axe to grind may even
dob you in.
So by all means find out what your competitors are charging but avoid, if you can, having
actual discussions or correspondence with them about prices. Otherwise someone, perhaps
the ACCC, may perceive you to have entered into an illegal contract, arrangement or
Next time we will take a look at some other important issues surrounding prices. m
Matt Crouch can be contacted at Hodgkinson McInnes Legal via email - email@example.com.
Te Puia, Rotorua
Offering world-class facilities, spectacular
landscapes, an unmatched array of
activities all within easy reach, and warm,
welcoming people, New Zealand will
take your next event from ordinary to
extraordinary. Plan the conference they’ll
never forget today.
A business event in New Zealand goes
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