On 14 March 2025, the Federal announced that it plans to extend on Unfair Trading Practices protections to small businesses after a consultation process found that:
- it is important to extend Unfair Trading Practices protections to small businesses, who face power imbalances when dealing with larger businesses;
- there is a significant gap in legal protections for small businesses where thousands of businesses have experienced unfair practices that cause substantial harm.
Treasury will consult this year 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.
This will complement a statutory review of the amendments to strengthen unfair contract term protections that were legislated in 2022.
The consultation will consider how Unfair Trading Practice protections can be used to address practices that harm small businesses.
In its submission to the Government’s consultation on protecting consumers from Unfair Trading Practices, the Australian Competition and Consumer Commission highlighted a 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 to which they may have been contractually entitled.
- Online platforms making significant account changes with limited notice or without transparent process – affecting Australian small businesses selling online.
- Platforms using complex digital interfaces that may lead small businesses into accepting disadvantageous terms when signing up for essential business services.
The foreshadowed expansion to the Unfair Trading Practice protections has come about, in part, due to the strong industry lobbying undertaking on behalf of the automotive dealers particularly highlighting the plight of Mercedes-Benz and Honda dealers following the switch to an ‘agency’ distribution model.
This article was written by Evan Stents, Lead Partner – Automotive Industry Group.
