Fairfax and News Limited could be in trouble with the competition regulator over an apparent breach of the Trade Practices Act in their online car classifieds operation.

A spokeswoman for the Australian Competition and Consumer Commission told Crikey this morning that complaints had been received and that the regulator was conducting market inquiries.

“It is not yet clear if there has been a breach of the Trade Practices Act,” she said.

Meanwhile an e-mail circulating among members of the Victorian Automobile Chamber of Commerce describes what News Limited and Fairfax are doing as a “text book case” of third line forcing, which is illegal.

Car dealers say that when they try to book an ad on the Fairfax site Drive.com.au, they are being forced to buy one on News Limited’s poorer performing carsguide.com.au as well.

A deal between the two sites, in which Fairfax sales teams handled bookings for both, was announced in January this year. Fairfax Digital’s Jack Matthews was quoted in this industry blog as saying “We ran it by the ACCC and advised them. They didn’t suggest that we shouldn’t proceed.” Hardly ringing endorsement.

And did they tell the ACCC that dealers would be forced to buy ads from both sites, or not at all?

As the ACCC site says:

Third line forcing is a specific form of exclusive dealing prohibited outright by the Trade Practices Act. It is not subject to the substantial lessening of competition test. It involves the supply of goods or services on condition that the purchaser buys goods or services from a particular third party, or a refusal to supply because the purchaser will not agree to that condition.

Car dealers fear advertising rates will go through the roof, although it should be said that there is still competition from leading sites like carsales.com.au, which is largely owned by car dealers, and Telstra’s Sensis.

Some dealers say they have been told that the Fairfax/News Limited deal has been run past the ACCC – but this is clearly not the case.

Matthews was also quoted as describing the deal as “streamlining” the marketing of cars, which has to be a candidate for best euphemism of the year.

Matthews did not return Crikey’s calls before deadline this morning.

Peter Fray

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