Small business, major gripes

Published On 26/02/2014 | By Hanna Gyton | Enforcement

The ACCC has launched its latest edition of the Small Business in Focus half yearly report, summarising the ACCC’s activities in the small business and franchising sectors and updating industry codes.

Of particular interest is the number of enquiries and complaints, with the ACCC receiving close to 3,600 complaints and 1650 enquiries from small businesses which is an 84% and 72% increase from the first half of 2013 respectively.  Franchising complaints rose slightly from 286 to 309, whilst enquiries almost doubled to 122.

According to the report, the most common complaints from small businesses are in relation to misleading conduct / false representations, followed by consumer guarantees.  The ACCC has received an increase in the number of complaints for each of these key issues, and a slight decrease in unconscionable conduct and misuse of market power complaints. By contrast, the franchising sector has seen a decrease in the number of complaints relating to misleading conduct / false representations, unconscionable conduct and exclusive dealing.  The cause of most franchising complaints is misleading conduct / false representations and disclosure requirements under the Franchising Code.

With the rise in the number of visitors accessing the ACCC’s online small business education program, the ACCC’s Deputy Chair, Dr Michael Schaper, noted that “the rise in complaints is likely due to a number of factors such as increased awareness-raising campaigns by the ACCC amongst the small business sector; enhanced data collection of small business issues within the Commission’s info-centre; and increasing public debate about small business matters and the Competition and Consumer Act (CCA) in recent months.”

The Abbott Government may welcome the statistics in the report as consistent with its message about the need to provide a “level playing field”.  The Coalition has certainly put small business issues on the national political agenda, with small business interests “unashamedly at the heart of this government’s policy and program deliberations and design”.  The most significant evidence of this is the Coalition’s ‘root and branch review’ of the CCA and the stated focus on the position of small business.  Relevantly, the review panel to be appointed is to consider:

  • extending to small businesses the unfair contract term provisions that currently apply to give certain protections to consumers;
  • whether the misuse of power provisions effectively prohibit anti-competitive conduct and support the growth of efficient businesses “regardless of their size”,
  • whether the framework for industry codes of conduct and protections against unconscionable conduct provide an adequate mechanism to encourage reasonable business dealings across the economy — particularly in relation to small business, and
  • whether enforcement and redress mechanisms can be effectively used by people (and small businesses in particular) to enforce their rights.

The Coalition’s emphasis on the position of small business suggests a move away from the protection of the competitive process to the protection of competitors, contrary to the historical approach underpinning competition law in Australia.  With the terms of reference still to be finalised and the panel to conduct the review not yet formally appointed, it will be some time until we see just how influential small business issues will be in competition and consumer policy and reform.

Photo credit: kevin dooley / Foter / CC BY

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