Third line forcing is a specific form of exclusive dealing. It occurs:

• where a supplier of goods or services makes it a condition of purchase of those goods or services or of receipt of discounts, rebates, credits or allowances in respect of those goods or services, that the purchaser also acquires goods or services of a particular description from an unrelated third party (s 47(6) , CCA); or

• where a supplier refuses to supply goods or services to a person or to provide discounts, rebates, credits or allowances in respect of those goods and services because that person will not acquire or will not agree to acquire goods or services of a particular description from a third party: s 47(7) , CCA.

Third line forcing involves two separate transactions — the first with the supplier who forces the purchaser into a second contract with the third party. Where the goods or services of the third party are supplied by the supplier as part of a bundle with its own goods or services, there will be no third line force. Where the supplier and the third party supplier are related bodies corporate there will be no prohibited third line force.

No third line force will occur where there is no supply on condition that the purchaser acquires goods or services from a third party. Conditionality is an essential element of the offence.

Unlike other forms of exclusive dealing, the prohibition against third line forcing in s 47(6) and (7) is absolute, and does not depend on whether the supplier has the purpose, or the conduct has or is likely to have the effect of substantially lessening competition in a market. Quite often third line forcing will either be pro-competitive or have little or no effect on competition in any market, but that does not provide a defence.

Examples of third line forcing include:

• a manufacturer requiring a purchaser of its goods to take out insurance from a specified third party;

• a promoter of a competition making it a condition of entry into the competition that the entrant acquire goods or services from a third party (eg “To enter company X’s competition, you must show proof of purchase of product Y from company Z”); and

• a supplier of services requiring a purchaser to buy products from a third party (eg Company B will service your photocopier but on condition that you purchase parts from Company A”).

See What is third line forcing?

A party wishing to engage in third line forcing can obtain immunity from prosecution by the Australian Competition and Consumer Commission (ACCC) by notifying of the proposed conduct under s 93 of the CCA. Unless the ACCC decides to oppose the notification, immunity is obtained 14 days after the date the notification is lodged.

See Notification of third line forcing.