Three waste management companies have updated their contracts to remove potentially unfair terms and conditions that had been imposed on their SME customers.
Cleanaway, Suez Recycling and Recovery as well as Visy Recycling had all been the subject of an ACCC investigation into unfair contract terms within the waste management industry.
The competition regulator said that all three companies agreed to change their price variation and liquidated damages clauses.
These clauses had allowed them to unilaterally increase prices in certain situations as well as impose penalties on customers seeking to end their contracts prematurely.
“Our view was these price variation and liquidated damages clauses in Visy Recycling’s, Cleanaway’s and Suez’s previous contract terms were likely to be unfair within the meaning of the Australian Consumer Law,” ACCC deputy chair Mick Keogh said.
“For example, Visy Recycling customers did not have a right to terminate their contracts if they were dissatisfied with price increases, and yet the contract required customers wanting to exit their contract early to pay the average monthly fees for the previous 12 months multiplied by the remaining number of months on the contract.
“Both Cleanaway’s and Suez’s liquidated damages clause required small business customers to pay 30 per cent of the payments remaining over the life of their contract, if they ended their contract early.
“In our view, customers had no way of assessing the justification for price increases which were unilaterally determined by Cleanaway and Suez.”
Under current competition rules, a court has the power to determine whether a contract term is unfair. If so, it then becomes null and void. But it is not currently illegal to include such terms in contracts or enforce them unless they have been struck down.
A number of large companies contacted by the ACCC over concerns about the fairness of contracts have made amendments voluntarily. ASIC is also working with the banking sector to remove unfair contracts.
Mr Keogh urged all businesses to proactively review their contract terms and remove any clauses that noticeably disadvantage customers or SME suppliers, before the matter finds its way to court.
He added that the ACCC is continuing its push to strengthen the laws governing unfair contract terms.
“As we continue to investigate potentially unfair contract terms being used by large businesses, the ACCC is calling for legislative change to enable the court to impose penalties and order compensation for customers where large businesses take advantage of unfair terms in dealings with small business and consumers,” the deputy chair said.
In response to the ACCC announcement, Suez issued My Business with a brief statement in which it disagreed the relevant clauses were “unfair”.
“Whilst SUEZ do not agree with the ACCC’s view that certain terms in SUEZ’s waste services contract are potentially unfair, we are taking the opportunity to revise our contracts with our SME customers with the aim of making them more transparent and to give our customers greater choice and flexibility,” it said.
Visy and Cleanaway have also been contacted for comment.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.