Exclusive rights trap exposed

THE organisers of one of world hockey’s biggest tournaments have been forced to clear some unexpected legal hurdles in order to establish exclusive agreements.

General manager of the 10th Federation International Hockey Women’s World Cup, Carolyn Parker, said she was required to notify the Australian Competition and Consumer Commission every time she wanted to appoint exclusive rights.

Exclusive agreements – for catering, ticketing arrangements and marketing – are fairly common in the sports event business.

Organisers do not have to notify the ACCC of such arrangements. However, by making the notification the organisers become immune from prosecution for exclusive dealing.

A successful prosecution carries a $10 million penalty for a corporation or $500,000 for an individual.

In the case of sporting events it is often a competitor of the company granted an exclusive supply licence that is likely to take action.

Under section 47 of the Trade Practices Act, exclusive dealing is not allowed, however, the ACCC has discretion to overlook instances if the exclusive dealing is in the public’s benefit.

Immunity from prosecution begins the moment a notification is lodged with the ACCC.

There is a second part to section 47 that refers to third-line forcing – where suppliers are supplying goods only if the purchaser acquires goods or services from another party. In such cases, immunity from prosecution is delayed for 14 days from lodgement of the notification.

One example of third-line forcing occurred during the 2000 Olympic Games, when tickets could only be bought using a Visa card.

Kott Gunning partner Mark Fatharly said making notifications was really a matter of protecting the entity in charge of the event.

“Even if it is a borderline case of exclusive dealing it is worth taking protection against any action,” Mr Fatharly said.

“There have been instances where people have been caught out.”

It costs $1,000 to notify the ACCC about third-line forcing in the first instance and $100 for additional related notifications – provided those other notifications are made within 14 days.

For notifications other than third-line forcing it costs $2,500 in the first instance and $500 for each additional notification within 14 days of the initial notice.

It is understood few major WA events have notified the ACCC about any exclusive dealing arrangements they may have.

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