The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) has enthusiastically welcomed the Australian Government’s commitment to introduce protections for small and family businesses affected by unfair business trading practices.
This announcement follows last year’s pledge to protect consumers and builds on ongoing efforts to ensure small businesses are treated fairly in the marketplace.
A much-needed legal protection for SMEs
The Albanese Government’s crackdown on unfair trading practices is set to extend beyond consumer protections to now include small businesses. In response to consultations highlighting the power imbalances that small businesses often face when dealing with larger corporations, the government has acknowledged the need to address a significant gap in legal protections for small businesses. This gap has led to thousands of businesses in sectors such as construction, agriculture, and retail experiencing unfair practices that cause substantial harm.
“This action is a matter of fairness,” said Minister for Small Business, Julie Collins MP. “Small businesses are vital to our economy, and we’re concerned about the disadvantages they face when dealing with unfair practices from larger players that might not breach existing laws but still cause harm.”
The government’s commitment aims to ensure that small businesses are fairly protected when engaging with larger companies. ASBFEO’s Billson echoed these sentiments, stating that this initiative would empower small businesses to innovate, compete, and thrive without the fear of being exploited by larger, more powerful entities. “This commitment to introduce protections will reassure small businesses, allowing them to invest and take risks without being unfairly taken advantage of,” Billson explained.
Filling the gap in unfair trading practices protections
The new protections will address harmful conduct and dealings that amplify and exploit power imbalances, causing harm to small businesses without legitimate business justification. “Sadly, too many of the more than 50,000 small businesses that ASBFEO has assisted with dispute resolution have fallen victim to harmful practices simply because a larger business used its power,” Billson said.
While unfair contract term protections have provided relief by preventing larger companies from imposing one-sided contract terms, there has still been no protection for situations where harmful practices are not explicitly written into contracts. These “too sharp by half” tactics—such as pressuring suppliers into unfavorable contract changes—fall through the cracks in the current law unless they reach the high threshold for egregious conduct. Billson emphasized that this gap is harmful, and the new protections will bridge that divide.
The Australian Competition and Consumer Commission (ACCC) has highlighted several unfair practices small businesses face, including situations where larger companies use their superior bargaining power to force small businesses into accepting unfavorable contract changes. Such practices are particularly evident in industries like food production and construction.
Supporting fair competition
The Albanese Government’s initiative builds on previous efforts to level the playing field for small businesses. This includes extending unfair contract term protections to more businesses, introducing penalties for breaches, improving the Franchising Code of Conduct, and taking action to improve small business payment times. Treasury will also conduct consultations on the design of these protections, including exploring whether a principles-based prohibition should be introduced and which specific unfair trading practices should be targeted to safeguard small businesses.
“Competition should be about better products and prices, not who can push around the little guy the hardest,” said Assistant Minister for Competition, Charities, and Treasury, Andrew Leigh. “Too often, small businesses—like farmers and suppliers—get strong-armed by bigger players who rewrite the rules to suit themselves. That’s why we’re cracking down on unfair trading practices.”
Leigh further emphasized that when competition turns into coercion, it no longer qualifies as fair competition. “A supermarket shouldn’t be able to drop a supplier just for asking for a fair price. A dominant firm shouldn’t get to ‘negotiate’ by holding all the cards and stacking the deck,” he said.
A fairer future
This new commitment to introduce protections for small businesses harmed by unfair trading practices is a major win for the sector, according to Billson. “We have advocated for this measure for four years, and it’s encouraging to see the Government moving forward with plans to address this significant gap in the law,” he said.
The government’s efforts to ensure fair competition will be complemented by a review of the amendments to strengthen unfair contract term protections, which were legislated in 2022. Additionally, Treasury’s upcoming consultation will examine how protections can be used to address harmful practices that affect small businesses.
“This is genuinely exciting and positive news,” Billson concluded. “It carries forward one of our 14 steps to energize enterprise by leveling the playing field.”
The government’s commitment to extend protections for small businesses will provide an invaluable tool for the Australian Competition and Consumer Commission (ACCC) to ensure that businesses are treated fairly in the marketplace. These actions mark a significant step forward in creating a more balanced and equitable environment for Australia’s 2.6 million small businesses.
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A critical legal gap, leaving SMEs exposed to ‘too sharp by half’ practices, is finally being addressed. Here’s how Australia plans to level the playing field: News, laws, SMEs Dynamic Business
