Trade Practices and Australia’s regions

The role of the Australian Competition and Consumer Commission (ACCC) is to apply the Trade Practices Act (TPA) without fear or favour, for the benefit of consumers throughout Australia. This means consumers of all kinds, including household consumers, small, medium and big business, farmers, and Local, State and Federal Governments.

The objective of the TPA and the ACCC is to enhance the welfare of Australians through the promotion of competition and fair trading and the provision for consumer protection. The ACCC has a range of functions designed to achieve this objective. Broadly, these involve the following.

  • Preventing anti-competitive conduct
  • Preventing unfair trading practices
  • Regulation of deregulating industries, such as the telecommunication, transport, and energy sectors
  • Preventing price exploitation as a result of the introduction of the New Tax System.

Regional and rural Australia is a priority for the ACCC in its work. Through its offices in each State and Territory, including Townsville and Tamworth, the ACCC ensures that it has an impact at a regional level.

In recent years, the ACCC has taken on a number of cases where the interests of Local Government have been affected. In the Queensland concrete price fixing case, the ACCC acted to break up a number of price fixing cartels involving suppliers of pre mixed concrete. The suppliers held meetings at which they shared out tenders in accordance with a system of ‘pet customers’ and agreed market shares, and then agreed not to tender at prices lower than the price to be submitted by the supplier allocated the tender.

Local Government bodies were among the ‘pet customers’ subjected to this conduct. The ACCC’s case resulted in corporate and individual penalties in excess of $20M.

In 1999 and 2000, the ACCC took court action against three suppliers of fittings and valves for DICL pipe. The cartel agreed to produce uniform price lists, to limit discounts to buyers and not to approach certain customers of each other. The main customers of the cartel were Local Government bodies and civil contractors.

The ACCC’s case resulted in penalties of $2.85M, with compensation being paid to customers, including Local Government, of $1.23M.

However, the ACCC is more than just an enforcement body. Small Business Managers in the ACCC’s State and Territory offices have developed a considerable network of contacts with Local Governments, industry and community organisations.

This has facilitated a process by which regional communities can inform the ACCC of their concerns on trade practices and related issues. It has also enabled the ACCC to promote the message that an understanding of and compliance with the TPA reflects good management practice and assists business success.

The participation of local communities will help the Commission shape future initiatives and its educative role.

A prime example is the Competing Fairly forums – a program of local forums which are designed to bring the ACCC together withlocal business people and influential community leaders, such as Local Government.

Competing Fairly Forums

‘Competing Fairly’ is a proposed program of local forums held in regional towns in all States throughout Australia and focussed around a video presentation and discussion via satellite. The forums build mutually valuable connections between the ACCC, industry and community organisations through Local Government and business leaders.

Participants are given an opportunity to:

  • hear panelists discuss trade practices issues that have an impact on the local area, and interact with those panelists;
  • identify how the Trade Practices Act and ACCC can work for regional businesses, industries and governments;
  • explore ways to provide useful information to, and support, local communities and organisations; and
  • discuss market and consumer issues that affect local communities.

The forums are not merely one way presentations. Each event is intended to be as participatory as possible.

Each participating town is provided with a local ‘mini web site’ through which they can register for the event, lodge suggestions and queries, and contribute to shaping the telecast’s content. The Internet is also used after the event for participants to provide feedback.

The pilot forum was held on 8 November 2000, linking 28 towns across regional and outer metropolitan Australia. The pilot involved Local Governments and organisations, such as the Australian Chamber of Commerce and Industry, the Australian Retailers’ Association, the National Farmers’ Federation and Australian Business.

Topics covered in the pilot forum included the following.

  • Petrol pricing in regional Australia
  • How the ACCC and the Trade Practices Act benefit small business and the development of Australian regions
  • Consumer protection, business advice and education messages
  • Electronic commerce

Burnie, on the north west coast of Tasmania, was one of the venues for the pilot forum. The event was convened by the Burnie City Council.

“Burnie welcomed the opportunity to support and participate in the Competing Fairly Forum held on November 8,” said General Manager, Paul Arnold. “The Forum provided a valued avenue to be informed of the role of the ACCC, and to exchange information on issues of concern to our community.

“Local businesses were well represented, and were pleased to be informed first hand of the assistance on offer to businesses through the role of ACCC in administering the Trade Practices Act. The Forum clearly illustrated that the ACCC is not only there to police the provisions of the Act, but is also there to help businesses in many ways. Burnie is keen to encourage the ACCC to continue its reach out to regional and remote communities, and is looking forward to assisting with the convening of further Forums.”

Following the success of the pilot program, the next Competing Fairly Forum will be held in May 2001. The main topic for this forum will be unconscionable conduct.

For further information, contact Nigel Ridgway, National Manager, ACCC Small Business Program, telephone (02) 6243 1223 or visit the ACCC Small Business website at www.accc.gov.au/smallbus/smallbus.htm

Helping to combat exploitative behaviour in business

The ACCC’s Small Business Program provides an important link for small business to seek remedies when they believe they have been subject to unconscionable business practices. Unconscionable conduct is all about not playing fair when the transaction involves a weaker party who is at a disadvantage.

In the past, judges have set aside contracts when a business took unfair advantage of a person who was under a ‘special disability’, which means that the person may have been unable to read the contract document or was infirm or in poverty.

The legal concept has been expanded by legislation to provide a specific statutory remedy for small business. This important legal provision is found at section 51AC of the Trade Practices Act. Section 51AC provides the courts with criteria on what matters they should take into consideration in deciding whether unconscionable conduct has occurred.

These criteria recognise that ‘disadvantage’ for small business is wider concept than just being unable to read a contract. A small business may be confronted with pressure tactics and contract conditions that are oppressive and unnecessary. The ACCC prefers that small businesses negotiate successful outcomes without recourse to litigation but the ACCC is prepared to clarify the meaning of section 51AC.

In ACCC v Simply No-Knead (Franchising) Pty Ltd (September 2000), the ACCC was successful in a court case taken against a franchisor for unconscionable conduct directed at the franchisor’s small business franchisees. The franchisor’s conduct was described by the Federal Court as bullying, unfair, unreasonable and harsh and involved unwillingness by the franchisor to negotiate or to act in good faith.

Section 51AC was introduced into law on 1 July 1998.

For conduct that occurred before that date, the ACCC must look to an earlier remedy provided at section 51AA. The courts have stated that section 51AA is a more limited remedy. The ACCC has taken action using section 51AA, mainly in matters involving retail tenancy disputes involving shopping centre landlords and small businesses.

The ACCC’s action in one tenancy matter (Farrington Fayre – September 2000) has expanded the categories of ‘disadvantage’ recognised by the courts to include the potential for a tenant to lose the value of the business when faced with oppressive lease negotiations.

The ACCC continues to promote a better understanding of fair trading principles and of unconscionable conduct.

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