Small business frequently asked questions

This section contains a list of frequently asked questions and answers about the Australian Consumer Law (ACL) and the Competition and Consumer Act 2010 (the Act), more broadly.

This list is designed to give a general overview of the rules, and how they may be relevant to your business. The answers are not definitive advice.

If, after reading these questions and answers, you want to know more about the way the law applies to your circumstances, you should seek legal advice or contact the ACCC’s small business helpline on 1300 302 021.

When I approached a wholesaler to supply my business, they refused. Can they refuse to supply me?

In general, businesses may decide who they wish to supply or not supply. Under the Act, no one has an absolute right to be supplied. There may be sound commercial reasons—legal ones—why a customer is refused supply of goods or services.

For example, a wholesaler or manufacturer may find it too costly or inconvenient to sell to people who walk in off the street, or may dislike supplying outlets that are located too close to each other. Alternatively, the supplier may believe that a reseller is a bad credit risk, does not promote the goods or services properly or lacks particular skills or expertise relevant to the business.

However, if a business refuses to sell to a particular business for anti-competitive reasons—such as believing that they will sell the products below the recommended retail price against the wholesaler’s wishes—then it may be illegal to refuse supply. If you believe that you have been refused supply for an anti-competitive reason, you may care to seek independent legal advice or contact the ACCC’s small business helpline on 1300 302 021 for further information.

My supplier advised they will only continue supplying me as long as I don’t discount below a certain price; is this legal?

No, this is called ‘resale price maintenance’ and is illegal under the Act. Suppliers (including manufacturers and wholesalers) may not specify or attempt to enforce a minimum price below which goods or services are not to be resold or advertised for sale.

A supplier may suggest an appropriate price (i.e. a recommended retail price) but cannot force resellers—by refusing or threatening to refuse supply—to stop charging or advertising below that price or from advertising discounts.

However, if the reseller has used the supplier’s products as a ‘loss leader’—a product sold at a discount, simply to attract more business—the supplier may be allowed to withhold supply.

Should the products I sell display the country of origin on their labels?

A country of origin claim is any labelling, packaging, logo or advertising that makes a statement or claim about which country the goods came from, for example, ‘Made in Australia’ or ‘Product of USA’.

Under the ACL, there is no requirement to label goods with their country of origin. However, if a business does decide to make claims about the country of origin of goods then those claims must be accurate.

General claims about the country of origin, such as ‘Made in Italy’ and ‘Proudly made in Australia’, have specific requirements attached to them. To apply such a label to goods they must be:

  • substantially transformed in the country that is the subject of the claim
  • 50 per cent or more of the cost of production or manufacture must have occurred in that country.

More specific claims about the country that goods were produced in, such as ‘Product of Australia’, have more stringent requirements attached. The country claimed in the labelling:

  • must have been the source for each significant ingredient or component of the goods
  • virtually all of the manufacturing and transformation procedures must have been carried out in that country.

Failure to follow these requirements could leave a business at risk of breaching the ACL.

The terminology used in these requirements, and the requirements themselves, are explained in detail in the ACCC's Country of origin publication. While the ACL does not require goods to be labelled with their country of origin, you may care to check with:

  • the Australian Customs Service if you import goods
  • state or territory fair trading agencies
  • Food Standards Australia New Zealand (FSANZ) for information about specific country of origin requirements under the Food Standards Code.

What can I do if a competitor is defaming the quality of my products to attract customers away from my business? Is this anti-competitive?

The Act contains rules against some types of anti-competitive conduct. Some conduct, while it may seem to fit under the general English language definition of ‘anti-competitive’ may not breach the Act.

Therefore, you would be best to seek legal advice. The Act is unlikely to provide a remedy for this type of conduct, as there are no provisions under the Act prohibiting defamation—however, remedies may be available under other laws.

If my competitor asked me to agree to charge set prices for certain products, would it be illegal for me to agree to do so?

Because price is a key element of competition between businesses, it is important that competing businesses set their prices independently of each other.

When two or more competing businesses make an agreement that has the purpose or effect of fixing, controlling or maintaining the price of goods or services, this will be considered ‘price fixing’, which is explicitly prohibited under the Act.

To avoid price fixing, always decide on your prices independently. Never agree with your competitors about what price to charge for goods or services.

If you agree to fix prices, you could expose yourself to heavy penalties. If you are approached by a competitor wanting to fix prices, you should consider contacting the ACCC with any information that has been provided to you.

Can I get together with my competitors and bargain with suppliers for goods and services?

Where two or more competitors in an industry come together to negotiate terms and conditions with a supplier, this is known as collective bargaining. It has been recognised that small businesses are often more likely to be heard on terms and conditions if they join with other small businesses to collectively negotiate with a larger business, rather than one-on-one. However, negotiating collectively may breach the anti-competitive provisions of the Act. In order to avoid breaching the Act, small businesses can lodge a collective baragaining notification with the ACCC to obtain immunity for such arrangements. For further information on collective bargaining notifications see the ACCC's Guide to collective bargaining notifications.

When should I withdraw goods from sale?

Under the ACL a business who displays the same good with more than one price – ‘with multiple prices’ - must sell the goods at the lower price or withdraw the goods from sale until the price is corrected.

A ‘displayed price’ is a price, or any representation that may reasonably be inferred to be a representation of a price that is:

  • attached to or on:
    • the goods
    • anything connected or used with the goods
    • anything used to display the goods
  • published in a catalogue available to the public, when:
    • the deadline to buy at that price has not passed
    • the catalogue is not out-of-date
    • that price applies only to the goods at a specific location or in a specific region, or
  • that reasonably appears to apply to the goods, including a partly-obscured price.

Where multiple pricing has not taken place, whether you can withdraw a product from sale and not complete the transaction depends upon the application of contract law. It is important to remember that a mistake is not a defence to civil proceedings taken for misleading and deceptive conduct or misrepresentations about price.

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An advertising firm has placed an ad for my business in a business directory and sent me an invoice. I never agreed to place an ad in the directory. Do I have to pay the invoice?

No. The ACL specifically prohibits a corporation from asserting a right to payment for unsolicited services, including advertising. Businesses or consumers who did not authorise the advertisement in question are under no obligation to pay the ‘account’.

If an advertisement has been authorised by deception, it may be that the business concerned has breached the misleading or deceptive conduct provisions of the ACL.

What does unconscionable conduct mean?

Section 21 of the ACL prohibits unconscionable conduct between businesses. It includes three principles given by Parliament to assist courts in deciding whether conduct was unconscionable and to help businesses better understand the law. 

Unconscionable conduct is difficult to describe or define as it varies on a case-by-case basis. As a general rule it is conduct that is so harsh or oppressive that it goes against good conscience.

Section 22 provides a list of factors that the court may consider in determining whether unconscionable conduct has occurred, including:

  • the relative strength of the bargaining positions
  • the imposition of unnecessary conditions
  • whether a party was able to understand the documents
  • whether any undue influence, pressure or unfair tactics were used
  • availability and price comparison of goods elsewhere
  • whether the conduct was consistent with other dealings
  • the requirements of an applicable industry code (i.e. the Franchising Code)
  • whether the stronger party failed to disclose any intended future conduct that might have affected the other party's interests
  • whether the stronger party was willing to negotiate
  • whether the stronger party had the power to unilaterally vary a term or a condition of a contract between the parties for the supply of goods or services
  • the extent to which the parties acted in good faith.

This is not an exhaustive list and it should be noted that the court may also consider any other factor it thinks relevant.

These factors are outlined in the ACCC’s Business Snapshot - Unconscionable Conduct.


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