A busy 6 months for the ACCC
Almost 5,000 small businesses contacted the Australian Competition and Consumer Commission in the second half of 2017, up from 3,700 in the preceding six months, according to its latest snapshot report.
“Alleged misleading conduct, false representations and consumer guarantees remained the top issues reported to the ACCC by business last year,” noted the organisation’s Acting Chair Dr Michael Schaper, who will step down in May after nearly a decade in the role.
The twice-yearly report summarises ACCC activities in the small business, franchising and agriculture sectors. The current issue also highlights a number of recent changes affecting small businesses including competition law reform, the ban on excessive payment surcharges and the new laws for unfair contract terms.
“Many of the businesses contacting us are at least ten years old. Despite being well established, there is an obvious need for up-to-date information and advice to deal with various competition and consumer challenges,” Dr Schaper said.
“As business regulation continues to evolve, small businesses are encouraged to learn more about their rights and responsibilities. The ACCC is always working to ensure that information and advice is readily available for business.”
The ACCC’s recently updated guide to the Competition and Consumer Act, for example, offers a comprehensive introduction to the law for small businesses, offering essential information on pricing, unfair contract terms, treating customers fairly, selling safe products and resolving disputes. Online education programs for business are also available alongside a small business helpline.
While many firms which contact the ACCC have fewer than 5 staff, 1 out of 3 firms have been established more than 10 years. In total 4,946 small businesses, 279 franchise businesses and 255 agricultural traders contacted the ACCC from July to December 2017. These included over 1000 reports related to misleading conduct or false representations and nearly 500 reports related to consumer guarantees.
Enforcement Action
The ACCC took enforcement action for alleged breaches of the Franchising Code, including court action and penalties against Pastacup franchisor Morild Pty Ltd and issued an infringement notice to West Aust Couriers Pty Ltd – trading as Fastway Couriers – in Perth.
The ACCC also issued infringement notices to Red Balloon Pty Ltd for alleged breaches of the new excessive payment surcharges laws and took court action against JJ Richards & Sons Pty Ltd, Servcorp Ltd and two of its subsidiaries for alleged unfair contract terms against small businesses. Two firms making deceptive claims about domain names were also taken to court.
The ACCC released an interim report on the competitiveness of prices, trading practices and the supply chain in the Australian dairy industry and a market study on new car retail practises, informing a final report which includes a number of recommendations addressing competition and consumer issues in the industry.
The report calls for a mandatory scheme be introduced to give independent repairers the same level of access to technical information as dealers and preferred repairer networks, subject to the appropriate safeguards, and that manufacturers update their complaints handling systems and commercial arrangements with dealers to ensure that they properly consider customers’ ACL consumer guarantee rights.
New Legislation
The report notes that new food labelling requirements will become mandatory from the 1st of July under a new review of the Food & Grocery Code while the transition period for the revised Horticulture Code ends on 1 April 2018.
On a broader note, Australia’s competition laws were amended by Parliament in November 2017, following a comprehensive review, and should help smaller firms compete on a more even playing field with larger companies.
A new ‘purpose or effects test’ will be used in cases of a misuse of market power, meaning that corporations with substantial market power are now explicitly prohibited from engaging in conduct that has the purpose, effect or likely effect of substantially lessening competition.
Action against informal cartels against consumer interests is now possible with the introduction of a new prohibition against concerted practices that have the purpose, effect or likely effect of substantially lessening competition. Such concerted practices involves some form of cooperation between businesses that is less than an ‘agreement’.
Changes to the collective bargaining notification process now make it easier for small businesses to lodge a notification to obtain legal protection to collectively bargain with a customer or supplier and the ACCC has developed interim guidelines setting out how it proposes to interpret the new market power and concerted practises provisions on its website.
Consumer action
2017 saw an increase in reports to the ACCC about consumer guarantee issues for both consumers and small businesses. A review of the online policies of several large Australian clothing retailers found that some may be misleading consumers about their rights under the ACL’s consumer guarantees for example.
The ACCC also warns small business owners against scams targeting their firms, with the number of fraudulent bills circulating on the rise.
Criminals are now using fake directory and advertising scams which send firms an invoice for a listing or advertisement that they didn’t authorise or request and making repeated demands for payment. Domain name renewal scams also involve an unsolicited invoice or email from a domain name supplier trying to trick firms into signing up to their ‘service’ or have a scammer trying to make firms pay for a fake domain name registration.
Retail Electricity Pricing
The ACCC is continuing its inquiry into the competitiveness of retail electricity markets in the National Electricity Market. It released a preliminary report in October which revealed that retail electricity prices for small businesses and households have increased by 80 to 90% over the last decade.
The remainder of the inquiry will focus on identifying practical and meaningful measures that will ease the pressures on electricity prices for Australians and a final report will be provided to the Treasurer by 30 June 2018.
Country of origin food labelling
From 1 July 2018, most food offered or suitable for retail sale in stores, markets, online or from vending machines must be labelled according to the Country of Origin Food Labelling Information Standard 2016.
To help businesses who produce or supply dairy products in Australia to comply with the Standard, the ACCC has released guide to country of origin labelling for dairy-based foods such as cheese and yoghurt.
Unfair contract terms
The ACCC continues to educate businesses and take action to ensure they receive the protections of the new unfair contract terms law. In addition to court action against JJ Richards & Sons and Servcorp, the ACCC also liaised with other businesses about potentially unfair contract terms and Australia Post, for example, is proposing changes for its licensees as a result.
The ACCC has also developed draft guidelines on small business collective bargaining to assist firms and farmers to engage in and understand the processes for obtaining ACCC approval for collective bargaining or boycott activity.
Excessive payment surcharging
The ban on excessive surcharges, which already applied to large businesses, was extended to small businesses on 1 September 2017. This ban restricts the amount a business can charge customers for using EFTPOS (debit and prepaid), MasterCard (credit, debit and prepaid), Visa (credit, debit and prepaid) and American Express cards issued by Australian banks.
Red Balloon Pty Ltd, recently paid a $43 200 penalty after the ACCC issued four infringement notices for allegedly charging four customers’ excessive surcharges when they made either credit or debit card payments.
If your company has a complaint under the 2010 Competition and Consumer Act, the ACCC can be contacted here.
