The introduction of the Competition and Consumer Act (formerly called the Trade Practices Act) in 1974 was designed to protect consumers from unfair or deceptive treatment, prevent businesses from acting unconscionably and prevent businesses from engaging in restrictive trade practices.
What is trade practices law?
Whether you are a provider or a consumer, trade practices law governs how you may act in the marketplace. There are 2 key areas in trade practices law, which are consumer protection and preventing restrictive trade practices.
What is consumer protection?
Consumer protection is dealt with under the Australian Consumer Law 2011. It covers:
- False and Misleading Representations: trade practices law prevents any business from entering a contract, advertising or making any statements which are misleading or deceptive. It even prevents conduct which is likely to mislead or deceive the public. Specifically, the law prohibits any misrepresentations about where a product is made, along with the price, the quality or the performance of those products. Ultimately, it is up to the Courts to determine whether a particular statement or advert is misleading - they do this is by considering if an average, reasonable person would be mislead.
- Warranties: Trade practices law also regulates refunds and warranties. All transactions are automatically covered by warranty protection under the law. These are called statutory warranties and they apply whether or not suppliers give their own guarantees. If they are breached, the consumer is entitled to either a refund, a free repair, a replacement or compensation. Providers of any goods and services cannot tell their customers that they are not entitled to refunds or protections, as this would be misleading customers about their rights under the law.
What are restrictive trade practices?
- Anti-competitive arrangements: it is illegal for any businesses to enter agreements with their competitors which lessen the competition in the marketplace. There are many examples of anti-competitive arrangements, such as market sharing and collusive tendering.
- Price fixing: it is illegal for any businesses to enter agreements with competitors to determine fixed prices of goods or services. Even informal agreements made in casual settings are not exempt and are generally considered no different to written agreements.
- Boycotts: it is illegal for competitors to restrict the flow of goods or services to another person or company. It is illegal to enter an agreement which would exclude a person or class of persons from the market.
- Misuse of Market Power: when a business becomes established in an industry and has a large share of the market, they are not allowed to act in a way which uses their market power to undermine competitive conduct.
- Exclusive Dealing: businesses may not create agreements on the condition that the buyer of a good or service will not acquire those goods or services from a competing supplier, if that agreement would substantially lessen competition in the marketplace. It is also illegal to require a buyer to purchase other goods and services from a third party, as a condition of buying.
- Resale Price Maintenance: a supplier is not permitted to force resellers to maintain the original prices of the products, with no discounts. It is illegal to demand resellers charge a minimum price for the product (though maximum prices are generally allowed). Genuine recommended retail prices are not illegal.