The Federal government has announced that it is extending its Unfair Trading Practices protection for the benefit of small businesses.
The decision comes in the wake of an earlier decision to extend the Unfair Trading Practices protection for consumers and heeding the request of the small-business sector that continues to face power imbalances when dealing with larger businesses. In particular, small businesses in the construction, agriculture and retail sectors are seen to benefit from the extended protections.
Treasury is set to conduct a consultation on the design of protections for businesses, including on whether a principles‑based prohibition should apply and whether specific unfair trading practices should be targeted to protect small businesses. It will also consider how Unfair Trading Practice protections can be used to address practices that harm small businesses.
The consultation is also seen to complement a statutory review of the amendments to strengthen unfair contract term protections that the Federal government legislated in 2022, as well as previous actions that include the extension of unfair contract term protections to more businesses and introducing penalties for firms that breach them, improvements to the Franchising Code of Conduct; and actions seen to improve small-business payment times.
The Australian Competition and Consumer Commission earlier pointed out, through its submission to the government’s consultation on protecting consumers from Unfair Trading Practices, the number of unfair practices small businesses may face, such as:
- Situations where larger businesses use their superior bargaining power to pressure smaller suppliers into accepting unfavourable contract changes
- Commercial tactics where large businesses may discourage small businesses from exercising their legal rights by suggesting possible commercial consequences.
- Retailers threatening to de‑list suppliers in retaliation for seeking price increases that they may have been contractually entitled to.
- Online platforms making significant account changes with limited notice or without transparent process
- Platforms using complex digital interfaces that may lead small businesses into accepting disadvantageous terms when signing up for essential business services.
“This action is a matter of fairness,” said Minister for Small Business Julie Collins. “Small businesses are vital to our economy, and we’re concerned about the disadvantages they face when dealing with unfair practices from larger players that might not breach existing laws but still cause harm. We’ve heard from various sectors including farmers, subcontractors, and small online retailers about challenging practices they’ve encountered. That’s why we’re moving forward with plans to extend these important protections.”
“Competition should be about better products and prices, not who can push around the little guy the hardest. Too often, small businesses – including farmers and suppliers – get strong‑armed by bigger players who rewrite the rules to suit themselves” said Assistant Minister for Competition, Charities and Treasury Andrew Leigh. “A dominant firm shouldn’t get to ‘negotiate’ by holding all the cards and stacking the deck”
“Competition should be about better products and prices, not who can push around the little guy the hardest. Too often, small businesses – including farmers and suppliers – get strong‑armed by bigger players who rewrite the rules to suit themselves, When competition turns into coercion, it’s not competition at all,” Leigh added.
