If you are a franchisor or operate a small business, advertise goods or services, negotiate with suppliers, are a distributor or compete with other businesses, then you should have a Trade Practices Act 1974 (Cth) (TPA) compliance program (Program) in place.

The ACCC Takes Action

A recent Australian Competition & Consumer Commission (ACCC) news release again highlighted the importance for franchisors to have such a Program in place. In this instance, G.J. Gardner Homes, Netdeen Pty Ltd and its directors have given Court enforceable undertakings after an ACCC investigation into allegations that the franchisor had mislead former franchisees.

G.J. Gardner Homes is a residential building franchise with approximately 100 franchises operating in Australia and elsewhere. The investigation revolved around misleading representations about the significance of the franchisor's buying power and some specific capabilities of its building management software system. The absence of a Program and resultant failure to follow any methodology to ensure compliance with the TPA contributed considerably to a breach of section 52 of the TPA and the consequences suffered by the franchisor and its directors.

Experience shows that compliance with the TPA does not happen automatically. To the contrary, what is often considered commercial, or good business practices may fall foul of the TPA. Businesses are often surprised to learn that their supply chain, pricing practices, advertising campaigns or failure to comply with mandatory industry codes breach the TPA.

In an attempt to partially address this, the ACCC published a guide to the Program for small businesses. The guide is designed to promote awareness of the TPA in the small business sector and assist small business operators to incorporate TPA compliance as an integral part of their businesses. Similar guidelines also exist for medium to large corporations.

Further details are available at Mondaq.