Mystique manufacture and distribute a high-end range of candles and scented products made from native Australian ingredients. The products are sold by retailers around Australia appointed under exclusive agreements, online by the manufacturer and in David Jones.

Mystique has limited the number of stores to two in each State, so it can oversee the presentation of stores and the customer service provided. Selection of retailers is made against specified criteria, designed to ensure that the retailer is suitably qualified to provide advice on the Mystique products to valued customers of the brand.

To ensure the high-quality brand image is maintained, and to prevent free riding, all retailers are appointed to sell in an exclusive territory within the State and the agreements include the following clauses:

1.1 "Mystique products are supplied to the retailer on condition that the retailer is not permitted to engage in practices that could damage the prestige image of the Mystique products in any way."

1.2 "The retailer must ensure that its prices are not below the prices published by the manufacturer in its online store."

1.3 "If the retailer is approached by a customer outside of its exclusive territory, the retailer agrees to refer that customer to the exclusive retailer appointed in that territory."

Mystique has recently launched a new scented candle, Euphoric Eucalyptus, claiming that it has therapeutic qualities that increase levels of happiness. It is stated to be 'made in Australia' but Mystique has been using a factory in ASEAN to manufacture the candles, using 100% Australian ingredients.

The ACCC has received two separate complaints about Mystique:

(a) The first from a retailer who wants to distribute Mystique's candles. The retailer is claiming that it could sell them more cheaply if appointed, which is better for consumers; and

(b)A customer claiming that the Euphoric Eucalyptus candle is not resulting in any increased happiness and is annoyed that the candles are manufactured in ASEAN when stated to be "made in Australia".

Advise Mystique on any potential action the ACCC could take under the Competition and Consumer Act (including the ACL). ***REFERENCE SECTIONS TO LAW/ACT**