ACC seeks to ‘shame’ big companies that squeeze subcontractors and suppliers

The West Australian, July 6, 2016

Big companies that squeeze smaller subcontractors and suppliers will be targeted as the competition watchdog seeks to shame wrongdoers under new Federal laws.

Acting chairman of the Australian Competition and Consumer Commission Michael Schaper said it was preparing to enforce the law from November and would pursue unfair contracts to highlight the new regime.

The law applies to contracts less than $300,000 within a year or $1 million over several years that are between a big business and a small one with fewer than 20 staff.

Unfair clauses can be voided and the commission can seek redress for the small business.

Dr Schaper said the ACCC was warning industry representatives they should revise contracts before the law takes effect.

“Clearly, when a new law like this comes into place, one of our priorities is to make sure it’s seen to actually work,” Dr Schaper said.

“You would expect the Commission would be investigating these matters but also, if we think there’s a clear problem, to be dealing with some of them.”

Independent contracting is one of five priority areas the ACCC identified for the new regime as are franchising, retail leasing and advertising, and telecommunications services.

The treatment of building subcontractors is emerging as a State election issue in WA, with a growing number of disputes over payments and conditions.

Labor intends to propose new protections. A frequent complaint is contracts are skewed in favour of the larger party, with the smaller business forced to accept variations that involve extra work without extra pay.

Dr Schaper said such provisions could be voided under the new law, which passed Parliament last year when Labor, the Greens and crossbench senators joined forces to widen its reach.

Examples of unfair contracts included shifts in responsibility away from the larger firm and unilateral contract variations.

This could involve contracts allowing the large firm to change terms and conditions without giving the small contractor a way to back out of it.

Dr Schaper said the ACCC would prosecute some cases but parties should first contact the Small Business Development Corporation and try arbitration.

The corporation could then identify cases for ACCC action.

After The West Australian reported concerns over Elizabeth Quay contracts, Labor foreshadowed a policy of penalties for failing to pay subcontractors.

Shadow commerce minister Kate Doust said this could apply to contracts for private and government projects.