The Victorian Automotive Chamber of Commerce (VACC) attended a round-table consultative meeting with the Treasury regarding its proposal to introduce a law against unfair trading practices that are not prohibited by current Australian Consumer Law (ACL).
Kathy Zdravevski, Industry Policy Advisor at the VACC, said one of the Chamber’s concerns is that due to the current definition of a small business, larger VACC members may not enjoy the same rights afforded by such a law.
“A small business is one who employs fewer than 100 persons or has a turnover for the last income year of less than $10 million. For instance, a franchise car or truck dealership may employ less than 100 people but have a turnover of more than $10 million (due to the price point of the goods). The same example may apply to a tyre retailer or other sectors of the automotive retail market,” said Zdravevski.
“VACC strongly advocates, among other changes, that any potential unfair trading prohibitions are extended to all businesses, not just small business within the current definition. This fair change recognises that all businesses can often face the same challenges when it comes to experiences of unfair trading.”
Currently, only certain types of conduct are prohibited under the ACL, such as misleading or deceptive conduct, unconscionable conduct, bait advertising, referral selling, and pyramid schemes.
The Treasury’s consultation paper outlines four options for reform:
- Changing the existing ‘unconscionable conduct’ law to include unfair conduct.
- Introducing a general prohibition on unfair trading practices
- Introducing a combination of general and specific prohibitions on unfair trading practices
- No change to the current law
According to Zdravevski, if a new law is introduced, businesses may face greater obligations to revise compliance practices, train staff, and ensure practices do not contravene broad and flexible provisions. However, clearly articulating acceptable business practices may also provide useful guidance while new penalties may deter unfair conduct and secure redress for harm.
Zdravevski said the paper does not limit who could seek redress under any new law, potentially burdening business and the economy.
“The Treasury paper appears to assume that any law would be enforceable by private litigation and class actions as well as by the ACCC and state consumer bodies. Permitting private enforcement and class actions over conduct that is merely ‘unfair’, in a general sense, would greatly expand the impact and costs to the economy of any new law and the risk of opening the floodgates for unmeritorious claims,” she said.
“Overall, the proposed options aim to balance the need to address unfair trading practices against burdening businesses with unclear or expansive new obligations. More work is required to refine and assess the options, and stakeholder feedback will inform Treasury’s decision on the preferred approach.”
Treasury will release a Decision Regulatory Impact Statement in 2024.