One of the most crucial and yet challenging problems which faces Australian competition lawyers is the definition of the scope of the terms “contract”, “arrangement” and “understanding” in ss 45 and 45A of the Trade Practices Act 1974. Section 45 proscribes contracts, arrangements or understandings which have the purpose or effect of substantially lessening competition in a market. Section 45A then expands on s 45 by providing that contracts, arrangements and understandings which “fix” prices are deemed, for the purposes of s 45, to have the purpose or effect of substantially lessening competition in a market.
The terms “contract”, “arrangement”, and “understanding” are not defined in the TPA and thus the legislature has left the matter of interpretation “at large”. Determining the boundaries of concepts such as “arrangements” and “understandings” is no easy task, especially when the focus of the enquiry is on the parallel behaviour of participants in concentrated markets.