Small businesses may have greater protection against secondary boycotts, with the introduction of the Trade Practices Amendment (Small Business Protection) Bill.
Announced by Federal Small Business Minister Fran Bailey on 15 August 2007, the bill seeks to amend section 87 of the Trade Practices Act 1974 (Cth) ("the Act") in order to allow the ACCC to take court action against secondary boycott practices.
What is a secondary boycott?
A secondary boycott is a form of "restrictive trade practice", whereby two or more people act together in order to prevent a third party (such as a potential customer or supplier) from dealing with or doing business with the "target" business. The "target" business, which is usually an innocent party, suffers loss or damage as a result of the boycott.
Ms Bailey said in a statement released following the bill’s introduction that secondary boycotts have a "devastating impact" on the economy.
"They disrupt trade, they reduce output and they inhibit competition," Ms Bailey said. "It is important that we provide a strong disincentive for those people who would target, intimidate and bully small business by applying a secondary boycott to that business."
Current powers of the ACCC to take action against boycotts
At present, section 87 of the Act allows the Australian Competition and Consumer Commission (ACCC) to take action against all forms of restrictive trade practices prohibited by the Act – except for secondary boycott provisions under sections 45D and 45E.
The ACCC is allowed to investigate and prosecute unlawful secondary boycotts under sections 45D and 45E, but it cannot bring representative actions. This means that under current provisions the ACCC cannot seek compensation or damages on behalf of parties affected by secondary boycott practices.
According to the Bill's Explanatory Memorandum (EM), the ACCC receives around 12 complaints each financial year in relation to sections 45D and 45E between 2004-2005 and 2005-2007. But these numbers might be even higher, as some businesses affected by secondary boycotts don’t lodge their complaints with the ACCC.
Bill seeks to allow ACCC to take secondary boycott breaches to court
The amendments to section 87 of the Act will for the first time empower the ACCC to bring court actions for breaches of secondary boycott provisions.
According to the EM, the proposed amendments seek to:
- achieve consistency in the application of the remedies and enforcement provisions of the Act;
- improve people’s access to remedies under the Act; and
- deter breaches of the Act.
"Under the Government's Bill, if the ACCC is successful in a representative action on behalf of businesses who are the targets of a secondary boycott, the targets will be able to obtain compensation the Court thinks appropriate, including damages," Ms Bailey said.
Ms Bailey added the amendments would:
- achieve "greater consistency" in the administration of the Act;
- provide Australian small business with "greater protection" from "unlawful secondary boycott conduct"; and
- ensure those who inflict economic damage on small Australian businesses will no longer be able to do this with impunity.
"The Coalition Government reaffirms its commitment to stand up for small business against thuggery and intimidation," Ms Bailey said. "It is vital, both for our economy and our way of life."