Buyer Power-FAQs

Buyer Power-FAQs

What is Buyer Power?

“buyer power" has the meaning assigned to it under section 24 (2D) of the Act.Buyer power means the influence exerted by an undertaking or group of undertaking in a position of a purchaser of a product or a service to obtain from a supplier a more favourable terms, or impose a long term opportunity cost including harm or withheld benefit which, if carried out, would be significantly disproportionate to any resulting long term cost to the undertaking or groups of undertakings.

Pursuant to section 24 (2A) of the Act, acts constituting abuse of buyer power, shall include:

  • Delayed payment by a buyer undertaking without justifiable reasons in breach of agreed terms of payment to suppliers;
  • Unilateral termination or threat of termination by a buyer undertaking of a commercial relationship without notice, or subject to an unreasonably short notice period and without an objectively justified reason;
  • Refusal to receive or return of part or all goods by a buyer undertaking, without justifiable reasons in breach of the agreed contractual terms with suppliers;
  • Transfer of costs; buyers transfer of costs or risks to suppliers by imposing a requirement for the suppliers to fund the cost of a promotion;
  • Transfer of risks; transferring commercial risks meant to be on buyer to the suppliers;
  • Demand for preferential terms by buyer undertakings which are unfavourable to the suppliers or demanding limitations on supplies to other buyers;
  • A buyer undertaking depressing prices by a small but significant amount where there is difficulty in substitutability of alternative buyers or a buyer undertaking reducing prices below competitive levels; and
  • Bidding up prices of inputs by a buyer undertaking with the aim of excluding competitors from the market.

In assessment of buyer power, under the criteria provided for in section 24 (2B) of the Act, the Authority will consider the following factors, including:

  • The actual position and concentration of the buyer undertakings in the market relative to supplier undertakings;
  • The commercial significance of the products in relation to the buyer undertaking;
  • The ability of the buyer undertaking to easily switch to competing suppliers and the supplier to easily switch buyers;
  • availability of substitutes;
  • the nature of the products such as perishable life of the products; and
  • the bargaining strength of the buyer undertakings

An undertaking or person may lodge a complaint to the Authority on an alleged abuse of buyer power by:

  • Submitting information concerning alleged abuse of buyer power by an undertaking or person.
  • filling the prescribed Form I; or
  • Submitting an anonymous complaint to the Authority.