Business Law for Small Business

Question:

Discuss about the Business Law.

Answer:

Introduction:

“Small business” is defined as a trade that encloses any of the these characteristics; firstly, having an annual revenue of less than 25 million dollars, secondly, having less than 50 employees at the end of the financial year and thirdly, having a consolidated asset of less than 12.5 million dollar at the end of financial year. If any of the above features are present in any given business then it may termed as a “small business.” The Competition and Consumer Act, 2010, earlier known as Trade Practices Act, contains a set of laws that governs how small businesses should operate in Australia. The Act contains a brief discussion of how small business should act with their competitors, suppliers or customers[1]. The Australian Consumer Law allows all businesses to compete with each other by maintaining a healthy competition and ensuring that consumers are treated fairly. Provisions relating to how consumers should be treated are contained in Australian Consumer Law[2]

Issues which Small Business in Australia face Under Australian Consumer Laws (ACL)

The small business in Australia faces a number of difficulties especially when it comes to compliance with the Australian Consumer laws. In Australia, the Australian Consumer Law (ACL) was incorporated as a single statute governing fair trading and consumer protection in Australia. This Act brought together all the consumer friendly legislations present in Australia into one single law which provides consumer rights uniformly all over Australia. Therefore, small business which manufacture or offer good and services to consumer at large need to comply with the rules and regulations set under the Australian Consumer Laws. Thus, this gets us to the primary issue which small business face in the present time in Australia. The primary issue in small businesses is that they need to ensure that they meet the legal requirements. Thus, not being able to fulfill the requirement of complying with legal requirements is a major concern for small businesses. Under the Australian Consumer Laws, every business has the responsibility and the obligation to make sure that they conduct their business fairly concerning consumers, community at large and other business. Thus, for a small business, this responsibility becomes very difficult to comply with due to few number of employees and funds[3].

Additionally, the Australia consists of three levels of government namely the Federal, the State and the Local government, each having separate rules and regulations[4]. Thus, compliance of legal requirements and obligation in relation to each of the said governments is very difficult for a small business. In the present times, the small businesses in Australia have the same level of regulations and compliance like any other large business houses, thus, complying with the strict government regulations becomes an expensive and a time consuming process for any small business.

Protection Under Competition and Consumer Act 2010 to Protect Small Business

The major issue which small business face in the present times in Australia is to deal with the market competitors, which are bigger in volume and size. Thus, Chapter 3 of the Competition and Consumer Act 2010 prohibits unfair trade practices in Australia in relation to trade and commerce, thus chapter was introduced and adopted with the primary objective to prohibit anti-competitive activities in the trade and business in Australia and the said section eventually protects the small businesses in Australia[5]. Thus, Part 3-1 of the Competition and Consumer Act 2010 prohibits false and misleading presentation, supply of goods which are unsolicited, prohibition from participating in pyramid schemes and practices which involve referral selling, coercion and displaying of prices[6]. The Australian Competition and Consumer Commission was an body formed to govern and punish the  companies, whether small or big that indulge in unfair trade practices and breach the laws under the Competition and Consumer Act 2010.

In 2012, the Australian Federal Court passed an order against Cathay Pacific Airways and Singapore Airlines Cargo directing them to pay a penalty of $23 million for breaching the rules under Competition and Consumer Act 2010 in Australia. The Cathay Pacific Airways and Singapore Airlines Cargo had engaged in illegal cartel practices which were price fixing. Additionally, in December 2012, the Australian Competition and Consumer Commission investigated Oticon Australia Pty Ltd after which it accepted engaging in resale price maintenance which is illegal trade practice in Australia.

Benefits of Australian Consumer Law to Small Business:

In Australia there seems to be a never-ending competition between the small business and the big business. The competition is always related to the fact that who should get more protection under the competition laws of Australia[7]. The competition law aims to provide protection to the competitive attitude of the businesspersons. According to the High Court of Australia, competition laws aim to protect the interests of the corporations or persons and not to protect the private interests of the corporations or persons. Since competition has the tendency of damaging the competitors, so a serious damage may lead to elimination of the competitor. However, this objective of the competition laws is forgotten and small businesses become a victim of misuse market power. Section 46 of the Competition and Consumer Act, makes it illegal for the firm having substantial power to take advantage of the power for anti competitive purpose. This Section was introduced to provide protection to consumers; however, the main aim was to provide protection to people who run small business. Small business always face problems such as anti competitive conduct, price fixing, mergers or acquisitions which lead to the formation of anti competitive conduct of the big business. This makes the small business more vulnerable to unfair trade and unconscionable conduct[8].

Conclusion:

Conclusively, it may be stated that there is a need to review the competition laws of Australia so that they meet the legitimate needs of the small business. This can be achieved by maintaining proper safeguards for and restrictions on small business. Hence, the legitimate concerns of small business should be identified and steps should be taken to protect their interests and secure their position in the market. 

Reference List

Corones, Stephen G. The Australian Consumer Law. Thomson Reuters, Lawbook Co., 2013.

Gray, Shannon E., Betul Sekendiz, Kevin Norton, Joachim Dietrich, Patrick Keyzer, Ian R. Coyle, and Caroline F. Finch. "The Development and Application of an Observational Audit Tool for use in Australian Fitness Facilities." Journal of Fitness Research (2016).

Hansen, Graham. "Google Inc v Australian competition and consumer commission [2013] HCA 1: Misleading and deceptive representations." UW Austl. L. Rev. 37 (2013): 153.

Hansen, Graham. "Google Inc v Australian competition and consumer commission [2013] HCA Misleading and deceptive representations." UW Austl. L. Rev. 37 (2013): 153.

Kolivos, Eugenia, and Anna Kuperman. "Consumer law: Web of lies-legal implications of astroturfing." Keeping good companies 64, no. 1 (2012): 38.

Miller, Russell. "On the Road to Improved Social and Economic Welfare: The Contribution of Australian Competition and Consumer Law Reform." Available at SSRN 2765659 (2016).

Ramsay, Iain. Consumer law and policy: Text and materials on regulating consumer markets. Bloomsbury Publishing, 2012.

Svantesson, Dan, and Roger Clarke. "Trade Practices Act: A Hard Act to Follow: Online Consumers and the New Australian Consumer Law Landscape, The." James Cook UL Rev. 20 (2013): 85. 

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