Turf breeder to address concerted practices concerns

Turf breeder Lawn Solutions Australia Group Pty Ltd (LSA) has provided a court-enforceable undertaking to address ACCC concerns that LSA may have engaged in a concerted practice by communicating with turf growers and resellers about the prices for turf.

On various occasions between November 2017 and May 2021, LSA circulated price surveys with requests that growers and resellers set their prices in line with its recommended retail prices (RRP). The communications also put pressure on individual growers or resellers to increase prices if they sold turf at a price below the RRP.

"We were concerned that the exchange of price information by Lawn Solutions Australia to its growers and resellers had the capacity, and appears to have been intended, to suppress or hinder price competition, including by facilitating cooperation between competitors," ACCC Commissioner Liza Carver said.

"Consequently, we were concerned it may have had the purpose or likely effect of substantially lessening competition in the retail supply of instant turf in greater Sydney."

"Companies that compete with one another should make independent decisions as to price. When independent decision making is compromised, this harms competition and may result in higher prices for consumers," Ms Carver said.

The ACCC investigation also found that between March and May 2019 LSA contacted a rival turf breeder, directly and indirectly, about the prices of the competitor's products.

LSA has acknowledged its conduct had the capacity to suppress or hinder price competition and that it raised concerns as to its compliance with concerted practices prohibition in the Competition and Consumer Act.

"When a business sells products to retail customers through licensed retailers or intermediaries, it risks engaging in an unlawful anti-competitive concerted practice if it seeks to facilitate cooperation between those retailers or intermediaries, replacing or reducing competitive, independent decision-making," Ms Carver said.

LSA has undertaken to cease circulating information to its growers and resellers which could be used to infer the future, current or recent prices of individual growers and resellers. It has also committed not to request that growers or resellers cease discounting or set prices by reference to LSA's RRP or another price benchmark.

LSA has also undertaken to implement a competition law compliance program.

A copy of the undertaking is available at Lawn Solutions Australia Group Pty Ltd (LSA).

Background

LSA claims to be Australia's largest network of Australian turf specialists. It develops, licenses and markets instant turf grass products, and has a large network of growers and resellers. LSA's most successful product is known as Sir Walter turf, a variety of Buffalo grass, sold under the trademark 'Sir Walter DNA Certified', which LSA claims is 'Australia's number 1 buffalo lawn'.

LSA has contractual relationships with businesses which grow and sell turf and with unrelated business which sell turf grown by LSA growers. Although LSA growers and resellers are part of the same network, they compete with each other in relation to the retail sale of turf in geographic markets in Australia.

A 'concerted practice' involves communication or cooperative behaviour between businesses that may not amount to an understanding but goes beyond a business independently responding to market conditions.

Most commonly, concerted practices will involve a pattern of cooperative behaviour or communications between two or more businesses. This may involve communicating in public or private. Concerted practices are illegal when they have the purpose, effect, or likely effect, of substantially lessening competition in a market.

Further information is available at ACCC Guidelines on concerted practices.

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