Students studying at universities in Sydney often purchase tickets to Covid-Safe events and parties online. Almost all students doing so use one of two specialist payment companies, CovCash Ltd and LaterSale Ltd. The websites selling tickets also offer Mastercard, Visa and Amex, but most students do not have credit cards so cannot use these options.

CovCash and LaterSale make their profit by adding a margin on top of the ticket price. They both add a $10 surcharge to each sale. Students are happy to pay this because of the convenience of their online payment service. CovCash has a 60% of share of sales and LaterSale has about 30%, with the remaining 10% going to credit cards.

Earlier this year, Sarah was fed up with paying the $10 charge, and decided to start a company called ClawBack Pty Ltd, which offered the same service as CovCash and LaterSale, but added only a 10% surcharge to every sale. This worked out a lot less than $10 for most students, so they flocked to ClawBack and within just one semester it had a 20% share of sales.

LaterSale was especially worried about this, because it was smaller and could not afford to keep up with CovCash. The CEO of LaterSale wrote Sarah an email saying:

"Congratulations on your success in Semester 1. As you know, it is in both of our interests to get more students attending campus functions again. We are running an ad campaign in Semester 2 where we will have glamorous students hand out invites to parties, and we will put the LaterSale logo at the bottom of the invites. Would you like to contribute to the cost of this, and we will add the ClawBack logo too?"

Sarah agreed and paid 50% of the cost of the campaign. It was a huge success, and by the end of the semester, LaterSale and ClawBack had a 35% share of sales each. CovCash was left with just 20%.

At the end of the semester, Sarah sent her thanks to the LaterSale CEO for the idea. She said next semester, it might be easier if they only included one logo on each invite. To do this, she said they would only target different universities. For example, ClawBack would put its logo on invites at the University of Sydney, and LaterSale at UNSW. The LaterSale CEO loved the idea and quickly agreed.

Sarahs idea did not work out though, and at the end of the next year, the market share of each business stayed the same.

Advise all relevant parties on whether there has been a breach of Australian competition law and whether they may face legal action from the ACCC.