The Australian Competition and Consumer Commission (ACCC
) has released its latest Small Business in Focus report (Report
), providing an update on key developments and focus areas for enforcement in the small business, franchising and agriculture sectors. For business, this provides a critical roadmap of high risk areas that the regulator is watching closely, which as a matter of good governance and risk management all businesses should be on top of and prioritising as part of their ongoing legal regulatory compliance programs.
Unfair contracts in the spotlight
Unfair contract terms remain a key focus for the ACCC, with ACCC Deputy Chair Mick Keogh noting in the Media Release for the Report that:
“Unfair contract terms are a big focus for the ACCC, and we want to make sure small businesses are not at a disadvantage because of one-sided ‘take it or leave it’ contracts”
The ACCC has already undertaken a number of investigations and actions to ensure small businesses receive the protection of the business-to-business unfair contract terms law which was introduced in November 2016. The ACCC is ramping up its argument for reform to introduce financial penalties for breach of unfair contract laws, as well as more sizeable penalties for substantial businesses in competition cases. Currently, unfair contract terms are merely voidable by court order. However, this is an area in which we expect to see legislative amendment sooner rather than later.
In a recent speech to the Law Council of Australia, the ACCC’s Chair Mr Rod Sims noted that even with the unfair contract laws, which are supplemented by prohibitions in the Australian Consumer Law against unconscionable conduct, the ACCC’s Digital Platform Inquiry identified potential gaps not effectively addressed under existing laws.
He also noted that in the context of digital platforms, like Google and Facebook, unfair contract terms arise often with disparate bargaining positions involving fast moving technology and data, all very much in the control of the provider. These services are increasingly important and even must-have parts of daily life for many consumers. Without further protections, the ACCC is concerned the digital platform sector is ripe for unfair behaviour, and is focusing on unfair terms such as:
Franchising, Misleading and Deceptive conduct and Scams
- changes to contract terms without reasonable notice, including in subscription arrangements that automatically renew
- business practices dissuading consumers from exercising their rights or requiring the provision of unnecessary information, and
- obtaining consent to a wide variety of practices through very long contracts that most of us will never read.
Also in focus is the franchising sector, with the ACCC already obtaining two court outcomes in 2019 for breaches of the Franchising Code and Australian Consumer Law. Read our article on the Ultra Tune case here
. This is certainly an area to watch for the next crack down on corporate misconduct and unfair contracts.
Interestingly, the Report indicates the most common issues reported to the ACCC were misleading or deceptive conduct claims; indicating this is becoming the most common, general legal claim that certainly has the potential to cover a wide range of conduct by businesses. Additionally, the ACCC reports that small businesses have reported $2.5million in small business scam losses.
In summary, it is clear that regulatory compliance continues to be a hot topic for business as regulators are certainly cracking down, with more funding and harsher penalties being sought by the ACCC. Looking forward, the ACCC has publicly stated that it intends to continue to be a strong enforcer of the law, with a number of advanced investigations into key areas of the economy, including: franchising, manufacturing, retail sector, conduct impacting Indigenous consumers, digital platforms, and car retailing. For more information, read the full ACCC Small Business in Focus Report here.
If you have any concerns about your business’ regulatory compliance, please contact our Corporate + Commercial experts on 1300 565 846
Image source: ACCC Small Business in Focus Report 22 August 2019