The Fair Trading Amendment Bill (Bill) had its third reading yesterday (10 August 2021) and should receive royal assent soon. The Bill was introduced on 17 December 2019. (Changes proposed earlier are summarised here.)
[Update (at 19 August 2021): The Bill received royal asset on 16 August 2021. The main changes will come into effect on 16 August 2022 (to give businesses a year to review their practices and standard form small trade contracts and be ready to comply), but some provisions were effective from 17 August 2021. The Commerce Commission has usefully summarised this here.]
The Bill is one of many recent, current and potential competition law reforms by the government. They remind us that more changes could be implemented relatively quickly.
Actual and potential reforms the government is making, include the new fuel reforms, monopolisation (unilateral anticompetitive conduct) law reforms, consumer data right proposals, and the Commission’s retail grocery sector competition study.
Apart from the threat of breakups, some options for recommendation in the grocery study draft report have more general impact, such as the Commission having the power to establish industry codes and authorise collective bargaining for small businesses.
The changes
A key change will be extending unfair contract term protections to “small trade contracts”.
Following debate in parliament, the definition of “small trade contracts” now includes requirements that:
- it is not a consumer contract;
- it is a contract between parties engaged in trade; and
- it is not part of a trading relationship worth $250,000 or more per year when the relationship first started.
The Bill includes examples of “small trade contracts”.
Other changes to the Fair Trading Act 1986 (Act) include:
- Prohibiting unconscionable conduct in trade (see our earlier article for factors the court may consider in assessing if conduct is “unconscionable”)
- Prohibiting uninvited salespeople from entering residential premises if residents tell them not to
- Requiring warranty providers giving an extended warranty by phone to give the consumer a copy of the agreement within 5 working days
- Expanding undertakings the Commerce Commission can accept to include undertakings to pay compensation to any person and pay to the Commission all or part of the Commission’s costs
- Giving the Commission the same powers it has under section 100 of the Commerce Act (confidentiality orders) to prohibit the disclosure of information, documents, and evidence forming part of an investigation
- Affirming the the High Court ‘s jurisdiction to consider questions of law regarding the Act referred by the Commission (ie to clarify legal issues)
- Allowing management banning orders against people who have committed 2 offences personally or as a director/manager of an incorporated or unincorporated body, as opposed to needing to have committed 2 offences personally
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