Marketing and Distribution Law, Anti-Competitive Conduct and Intellectual Property - Essay Example

Name Course Name Instructor’s Name Date Marketing and Distribution Law Defining "anti competitive conduct" and "intellectual property" Any business conduct that seeks illegal ways to compete rivals can be defined as anti-competitive conducts. Price or wage gouging are some of the examples of anti-competitive conduct carried out in a business scenario. Anti-competitive conduct is usually conducted by large businesses to establish their position in the market and to make sure that no small businesses or other competitors are able to thrive in the market. Big business house or corporates come together to dominate the market and market price of the products leaving no room for small businesses to earn profits or sustain themselves in the market place. This kind of conduct is known as anti-competitive conduct. Intellectual property – Intellectual property is a wide term that encompasses various legal entitlements attached to certain inventions, recorded or written media or names. Intellectual property can be divided into two categories- Industrial property that includes various trademarks, patents, industrial design, and geographical indications of sources. The second category of copyright includes those of performances of various artists, phonogram-recording producers, and radio and television broadcasters. Intellectual property can be the product of any individual’s intellect or artistic talent. As the owner of a certain art of product, he or she has full right to have exclusive possession of the creation and to make sure that no other person is able to use or copy his or her creation without prior permission. This is where intellectual property comes in. Any creation invented or produced by an individual or a business house can be termed as intellectual property to grant exclusive ownership to the producer of the specific product. The prime aim of specifying a product or creation as intellectual property is to prevent its Plagrisim or mis-use by any person other than the owner. Laws prohibiting anti competitive conduct Australia follows very stringent anti-competitive or competition laws. More recently, legislation has been introduced into the Australian Parliament to amend the competition law provisions of Trade Practices Act (1974). This proposal will ensure that businesses or individuals defying the competition law should face maximum penalties. The bill for amendment of trade practices act legislation proposes to increases the maximum pecuniary penalties for business entities or businesses contravening the Act. According to the proposed legislation, businesses contravening the Act can be levied with penalties upto greater than $10 million and three times the profit gained by the business. For an individual defying the law, penalties imposed is upto 500,000. The bill also proposes the grant of power to the federal court (on application by the Australian Competition and Consumer Commission (ACCC)) to punish or disqualify individuals or businesses indulging in anti-competitive conduct. Criminal penalties for breach of Part IV of the Act are not part of the current amendment package. Though the legislation amendment aims to proposes to include it under the trade practices Act that would ensure that large companies or individuals indulging in criminal offences like colluding with rivals to set-up prices, limit share-market or rig bids be booked under criminal act. The prime aim of the proposed legislation is to broaden the powers of ACCC to investigate and prosecute individuals and business entities contravening the act. This is because a review of the current section 155(2) reveals that it is not subjected to adequate safeguards and there is a need to make sure that the regulatory powers of executive body is at par with that of the judicial branch. There are many arguments going on whether law preventing anti-competitive conduct be enforced in Australia or not as well their overall impact on the businesses. Considering the impact of competition act amendments enacted in the US, the Competition Act in Australia is being considered as a positive move to eradicate collusive practices in domestic as well international market. The Act would ensure that no individual or business entity is able to misuse or abuse the marker power. It has been observed that large businesses tend to misuse their market power to indulge in practices such as anti-competitive low pricing to undermine competition in the market where small businesses could not match up with the prices set up by the giant competitors. According to the recommended amendment for Section 46 of the Trade practices Act, provisions would be set to specify the selling at below cost or unreasonably low prices. At the same time prohibiting the anti-competitive price, discrimination would ensure that suppliers are prevented from discriminating between the competitors concerning the nature of buyers and the relationship between buyers and suppliers from where they buy the similar products in similar quantities. In situations where customers are buying similar products at unexplained price differences, the competition in market is imprecise resulting with one customer having a price advantage over another customer. This results in inability of small businesses to offer discounts to their customers, similar to large businesses. This definitely hampers the growth, profits, and prospects of small businesses. This in turn results in small businesses facing huge losses and ultimately being acquired by a large business or corporate. Customers are left with no or little choice and convenience; as well, they have to purchase products at price dictated by the large business houses. The prohibition of anti-competitive price discrimination act would safeguard the interests of small businesses and put a control on large businesses from dictating unexplained product prices in the market. Anti-competitive conduct would be able to undo the effect of anti-competitive conduct in a highly concentrated market wherein large businesses with a big hold on market power would not be able to dominate the market and exploit small businesses or new entrants in the market. The amendment in Section 46 of the Trade Practices Act would provide ACCC with ample power to issue a ‘cease and desist’ order in market scenario where large businesses have been misusing their market power. Considering the facts above, it can be inferred that by controlling the anti-competitive conduct and enforcing stringent competition laws, it would be relatively easier for the small businesses to thrive in the competitive environment. As well as it would be ensured that, any individuals or businesses are unable to misuse their market power for their own selfish gains by exploiting the competitors, small businesses, or new entrants to the market. Enforcement of competition law and the proposed amendments would bring stability to the market as well as prevent unexplained price costing by few dominant players. Customers will in turn have an opportunity to conveniently purchase goods at a reasonable price across locations as the law curbs price advantage. Therefore, enforcement of the anti-competitive law is definitely in favor of Australia’s economy and to curb the price fluctuation and dominance of the market by few larger businesses. It would further prohibit the anti-competition in the already highly competitive and concentrated Australian market. Prohibited Anti-competitive conducts Some anti-competitive conducts are prohibited outright for example, price fixing, some others are prohibited if they lessen the competition. Lessening of competition implies that the buyers or customers have a diminished ability to buy the deal that suits them. Some of such practices restricted under the competition law are misuse of market power, boycotts, third-line forcing, resale of price maintenance, and illegally placing limitations on the resellers. Laws protecting intellectual property Now let us see the significance of Intellectual Property laws in Australian economy and its impact on the growth and development of Australian economy. Australia has very stringent Intellectual property laws and against any mis-use of Intellectual property. Intellectual property can be anything ranging from property of your mind or intellect including invention, trademark, original design, or the practical application. In business terms, intellectual property can include your proprietary knowledge and resources like trade patents, copyright, circuit layout rights etc. In the highly competitive global market scenario, intellectual property often gives you an competitive advantage over your competitors. Therefore protecting your intellectual property is essential for your business and for maintaining your competitive advantage over your rivals. Therefore, the rationale behind protecting your intellectual property is similar to protection of Trade practices act- protection of your business or rights from exploitation by more dominant players in the industry. By enacting and enforcing intellectual property law, Australian Government intend to protect the welfare of Australian citizens by providing consumer-protection, regulated and fair practices, and regulated competitive practices. There are four broad-policy based justifications supporting Intellectual Property in Australia. Contract theory- Individuals or businesses who publicly disclose their work or inventions are granted Intellectual property rights to own and use that property for limited time. Reward theory- Reward theory provides reward in terms of exclusive rights to the individuals or businesses for their efforts to bring an innovation to the market. Incentive theory- Incentive theory provided exclusivity to IP as an encouragement for owners who take the risk and cost of bringing out innovation to the market. Natural Rights theory – As per this theory, Intellectual property owner is naturally entitled to the benefits associated with developing an innovation. The key Intellectual Property Acts active in Australia are: Patents Act administered in 1990 by Intellectual Property Australia Trademark act administrated in 1995 by Intellectual Property Australia Designs Act administered in 2003 by Intellectual Property Australia Copyright Act administered in 1968 by the Attorney General’s department Plant Breeder’s Act administered in 1994 by Intellectual Property Australia Circuit Layout Rights administered in 1989 by Attorney General’s department Intellectual property laws explicitly bar any individual or business from using other’s Intellectual property without any prior permission. Laws protecting intellectual property create exclusive rights for the IP to the owner. Intellectual Property rights provide a number of competitive advantages for their respective owners in Australia: Intellectual property rights can be sold for financial profits Intellectual property rights help owners to compete with their competitors based on quality associated with quality along with the price Intellectual property rights give exclusivity on the use of Intellectual property Artistically or intellectually gifted people have complete rights to protect their creations from any sort of unauthorized use by others. This concept is similar to the right of owners of physical properties such as houses, cars, etc. If owners have a right to protect their physical property than why not intellectual property. Protection of Intellectual property rights is vital because it encourages investment, attract talent, expand economies, and create new opportunities and jobs. With economies becoming highly competitive and with increased focused on quality and services, there is a need for businesses or individuals to protect their creativity- their most valuable asset to maintain competitive advantage over competitors. Intellectual property rights creates new incentives to develop new technologies as without Intellectual property there would not be any incentives to develop new technologies with the fear of them being copied or mis-used by the competitors. Protection of Intellectual Property is encouraged in most nations as it safeguards the work and their rights for its rightful owners which in turn fosters economic growth and encourages technological innovation as well as create new opportunities for citizens as well as attracts investment. The World Bank's Global Economic Prospects Report for 2002 confirmed the growing importance of intellectual property for today's globalized economies, finding that "across the range of income levels, intellectual property rights (IPR) are associated with greater trade and foreign direct investment flows, which in turn translate into faster rates of economic growth." People across the world essentially focus on their economic and cultural growth as well preserving its mis-use of any sort. Intellectual property protection rights serve the need for protection of individual’s asset from being copied or used by any one without prior permission. This effectively fosters economic health and well-being of individuals as well as their businesses. Australia being a people-centric country lay enough emphasis on intellectual property laws to ensure that the valuable assets of its citizen and their innovations are protecting against any exploitation from competitors. By doing so, Australia encourages innovations and artistically talented people to come up with new discoveries that would lead the country to the path of progress, economic development, and prosperity. Different types of intellectual property protected by the law Technological inventions protected by patents. Distinctive features such as words, symbols, smell, sounds color, and shapes, any thing that distinguishes one product from other can be protecting against mis-use under the trademark rights. Design protection offers mis-use or copying of external appearances of specific objects such as, car body parts, tableware, jewellery, etc. Most countries also provide legal intellectual property protection for trade secrets and geographical indications. Importance of prohibiting anti competitive conduct and protecting intellectual property Prohibiting anti competitive conduct and protecting intellectual property is vital for safeguarding the interests and rights of individuals as well as their businesses. Unless people or businesses are guaranteed that their rights and interests are well protected under the laws of the State, it would be invariably tough for any economy to grow or prosper. This is because, if citizens or businesses have a threat that their hard work in establishing a business would go vain by market dominance of some large key players, they would be scared of stepping into the market or looking for new opportunities. This in turn would increase concentration of some large players in the business and in turn diminish opportunities for consumers or customers to get a deal of their choice and they would have to depend on the few choices and price range set by few players dominating the market. Similarly, in absence of Intellectual Property rights it would be very easy for any individual or business to make a claim on intellectual work or creation of others. This is turn would discourage intellectually or artistically talented individuals from coming up with innovations or work that can benefit them as individuals or as businesses and their nation’s economy as a whole. On the other hand Intellectual property rights ensure that rights and work of individual are protected against any sort of Plagrisim or copy by others. This encourages individuals to come up with innovations and get them protected under Intellectual property rights. This safeguards their work and brings scope of innovation, creativity, and economic development for the nation. References “Anti-competitive conduct and restrictive trade practices.” Australian Competition and Consumer Commission. 2007. ACCC Gov. 20th Oct 2007. http://www.accc.gov.au/content/index.phtml/itemId/259608/fromItemId/3669 Thomas G. Field Jr.” What Is Intellectual Property?” International Information Programs Jan 2006. 20th Oct 2007. http://usinfo.state.gov/products/pubs/intelprp/ “Intellectual Property”. Policy and Business Practices. 2007. 20th Oct 2007. http://www.iccwbo.org/policy/ip/id2949/index.html “Submission of the Trade Practices Act Review”. Council of Small Business of Organisations of Australia Ltd. July 2002. 20th Oct 2007. http://tpareview.treasury.gov.au/content/subs/089_Submission_COSBOA.pdf Lisa Emanuel , Kristina Barbov. “Australia: Tougher Penalties For Anti-Competitive Conduct And New Search And Seizure Powers For The ACCC”. 18 August 2004. 20th Oct 2007. http://www.mondaq.com/article.asp?article_id=27927 Read More