January 18, 2021
With school set to begin next week, many families will be rushing to make last minute purchases for school items. With this hype in the market, certain retailers may opt to unscrupulous business practices in order to profiteer at the expense of consumers. One such tactic which traders have used in the past during this time of the year is ‘Exclusive Dealings’ whereby certain schools had made arrangements with specific businesses to sell uniforms and parents/guardians were explicitly told to go to these traders. It is imperative therefore that consumers understand what exclusive dealings are and its possible repercussions.
What is exclusive dealing?
Exclusive dealing occurs when a person/business trading with another imposes some restrictions on the consumers’ freedom to choose with whom, in what or where they deal. The hallmark of exclusive dealings is that it disallows competition leaving consumers with no choice but to purchase from a single trader often resulting in hiked prices. There are several types of exclusive dealing. These include:
Third Line Forcing – occurs when a trader will only supply goods or services or provide a discount on the condition that the consumer buys goods or services from a third party. If the consumer refuses to do so, the trader will refuse to supply their services or products. For instance, an employer making it mandatory for its employees to open their bank account with a particular bank for depositing salary or an employer restricting employee to purchase uniform from one trader only.
Full line forcing – involves a supplier refusing to supply goods or service unless the consumer agrees not to:
- buy goods of a particular kind or description from a competitor
- resupply goods of a particular kind or description acquired from a competitor
- resupply goods of a particular kind acquired from the company to a particular place.
Is it legal?
Exclusive dealing practice is an offence under the Fijian Competition and Consumer Commission Act 2010. The Consumer Council of Fiji has and continues to raise awareness on such shoddy and unethical tactics and market behaviour being employed by certain businesses which breaches consumers rights to a free and fair market.
In the instance of exclusive dealings relating to schools, it restricts parents and guardians from taking advantage of and benefiting from comparative shopping at affordable costs. How? In exclusive dealings the selected trader (by the school) sets the price where parents and guardians cannot look elsewhere for a bargain. This is because their choice has been restricted by schools. Year in and year out this issue is highlighted by the Council to stop unfair trade practices in the market place. This is great importance now than ever before as thousands are still reeling from the economic impacts of COVID 19 and the recent Tropical Cyclone Yasa. Therefore, businesses and even schools should refrain from placing limitations or restrictions on parents and guardians which may put additionally burden on their finances.
Additionally, exclusive dealings tend to create exclusive products which in turn makes the supplier more powerful in the marketplace. This will then ultimately lead to anticompetitive behaviour by certain traders – in most cases this affects consumers as they are required to dig deeper into their pockets to pay the relevant price.
Parents and Guardians who are out and about shopping are also reminded to wary of advertisements and sales promotions. In the past, the Council has discovered many traders using the phrase “preferred choice” in advertisements. While this may not necessarily be exclusive dealing, it implies that they are the superior choice and consumers are led to believe that they can only buy from these specific traders. Often times, this is just a sales tactic and consumers should do their due diligence before making purchases.
In previous back to school shopping seasons, certain businesses were also warned for advertising that they have been selected by schools as the sole suppliers of uniforms with the phrase “we are preferred suppliers of uniforms for the following schools”. This is a misleading advertisement and breaches the Fijian Competition and Consumer Commission Act 2010.
Consumers are urged to notify the Council of any such instances if they feel that schools are colluding with businesses for profit to become exclusive suppliers of products. Any concerns can be raised via the Consumer Council of Fiji Toll Free Helpline 155. Alternatively, consumers can lodge a complaint via the Consumer Council of Fiji Mobile App or email email@example.com