Parallel conduct, ACCC v Colgate-Palmolive
Antitrust and Trade Regulation
Parallel conduct by competing firms is an almost unavoidable phenomenon in the real world. Of course, parallel conduct can be the result of completely independent and uncontroversial behaviour, such as when all suppliers are affected by and respond unilaterally to an identical increase in costs. Few would suggest that, in such circumstances, the firms’ conduct should be subject to sanctions. At the other extreme, parallel conduct can be the result of interdependent and deliberately coordinated behaviour, such as when all suppliers meet in the proverbial smoke-filled room and agree to fix prices. Few would hesitate to condemn such conduct under antitrust law or competition policy. But as economists have been telling us for decades, there is a vast middle ground, where the parallel conduct stems from some degree of interdependence and some behaviour short of the hard-core cartel described above. This is especially likely to be the case when the industry is relatively concentrated or oligopolistic in structure and firms have a history of interacting in the marketplace. Understanding the reasons for the parallel behaviour and deciding what to do about it is a central element of modern antitrust law and policy. New forces at work will increase the challenge of distinguishing acceptable and unacceptable parallel conduct. For example, the likely effect of the 2017 revisions to Australia’s Competition and Consumer Act that were intended to increase deterrence of coordinated behaviour will be to bring additional behaviour under antitrust scrutiny and may broaden the grey area of what is permitted and what is not. In addition, use of artificial intelligence such as algorithmic models used in decision making may reinforce interdependence among firms and thus introduce new sources of coordinated behaviour to be evaluated through an antitrust lens. At the end of the day, an understanding of how interdependence and conduct interact will be an essential part of the exercise. This paper is intended to assist in understanding that interaction.
George A. Hay and E. Jane Murdoch, "Competing explanations for parallel conduct: Lessons from the Australian detergent case (ACCC v Colgate Palmolive)," 28 Competition & Consumer Law Journal 141 (2021)