Waste management giants Visy Paper, Cleanaway and Suez Recycling have reviewed and amended small business customer contracts over Australian Competition and Consumer Commission (ACCC) concerns they may have contained unfair terms.
Releasing the results of a blitz into the waste management industry today, the consumer and competition watchdog said contracts allowed the market leaders to unilaterally increase prices in some circumstances and impose penalties on customers who tried to prematurely exit.
All three companies co-operated with the ACCC and agreed to make changes to their price variation and liquidated damages clauses.
Under the now changed Visy contracts, customers were not allowed to terminate their agreements if they were unhappy with price increases, despite being required to pay a hefty fee for exiting early.
The ACCC said Cleanaway and Suez contracts required small business customers to pay 30% of remaining payments in their contracts if they wanted to end things early.
“In our view customers had no of way assessing the justification for price increases which were unilaterally determined by Cleanaway and Suez,” ACCC deputy chair Mick Keogh said.
Australian Small Business and Family Enterprise Ombudsman Kate Carnell says the ACCC is doing a “great job” identifying companies with potentially unfair terms.
“The sorts of clauses identified here are obviously unfair for small businesses,” she tells SmartCompany.
“The message to all big companies who have standard form contracts is to have a very close look at them, and don’t take the position that a number of others have taken … where they’ve said the courts will decide.”
The industry investigation comes after a Federal Court ruling in October last year which found eight terms in standard JJ Richard & Sons contracts were unfair.
Also today, the ACCC secured contract amendments from dairy processors Fonterra, Parmalat, Lion Dairy & Drinks and Brownes Food Operations among others in relation to unfair contract terms.
The ACCC expressed concern dairy farmers are getting a raw deal, particularly in relation to lengthy notice periods for contract termination, broad indemnities and other restrictive terms.
A host of other firms, including Equifax, ServCorp and Cardtronics, have come under the spotlight in the last twelve months in relation to unfair contract terms, following legislative changes in 2016.
Those changes extended Australian Consumer Law to protect small business from unfair terms, but the ACCC has argued reforms need to go further.
Both parties believe the regulation lacks teeth because while a court can declare contract terms to be unfair, it can’t impose any financial penalties for a breach.
Carnell says the scale of the issue merits tougher penalties.
“The prevalence of unfair contract terms shows there does need to be a tightening up … there needs to be a penalty,” she says.
The ACCC repeated its calls for tougher laws today, saying it would help them keep large businesses in line.
SmartCompany contacted Visy, Cleanaway and Suez for comment but did not receive a response prior to publication.