Third line forcing and commercial contracts

Third line forcing is a form of exclusive dealing that is prohibited under the Competition and Consumer Act 2010 (Cth)(CCA).  It occurs where one corporation (Forcer) enters into a contract to supply goods or services to another (Forced Party), which includes an obligation to buy goods or services from an unrelated third party (Third Line Party).

It’s common in various commercial contracts including franchise and license agreements, for the issuer of the contract to attempt to limit or restrict who a party buys goods or services from. The reason for this is obvious in terms of the need to ensure that a uniform product is delivered to customers. The often cited example being the uniformity of the width of fries served at every McDonald’s throughout Australia and for that matter the world.

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The risks of ‘manufactured’ business testimonials: a lesson from the ACCC

On 18 December 2015, the Federal Court handed down an order for relief based on a case initiated by the ACCC in July 2014.  The order imposed penalties on A Whistle & Co Pty Ltd (the Respondent) for breaching the Australian Consumer Law (ACL) by publishing fake customer testimonials.  Whilst it is common marketing practice to use testimonials to create the appearance of customer satisfaction, the judgment, Australian Competition and Consumer Commission v A Whistle & Co (1979) Pty Limited [2015] FCA 1447 demonstrates why businesses should ensure that they engage in genuine and legitimate marketing, and avoid misleading or deceiving their consumers. [Read more…]

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