Small businesses as the next frontier: Treasury consults on extending the unfair trading ban

The Federal Government has released a consultation paper examining whether the forthcoming unfair trading practices prohibition should be extended to protect small businesses and franchisees. The proposal, which was previously foreshadowed by the Government in 2025, signals a potentially significant expansion of the Australian Consumer Law (ACL) and would reshape expectations for business‑to‑business conduct across the economy.

The consultation is relevant to suppliers, digital platforms, franchisors and any organisation engaging with small businesses, as it forms part of the Government’s broader ‘fairness’ agenda and ongoing consumer law reform program.

Background

In April 2026, the Government introduced the Competition and Consumer Amendment (Unfair Trading Practices) Bill 2026, which proposes a new general prohibition on unfair trading practices affecting non-business consumers, as well as regulating subscription contracts (including with small business) and the disclosure of transaction-based charges. The Bill is currently the subject of a Senate inquiry. Refer to our May 2026 edition of Consumer Express for our analysis of the Bill.

As presently drafted, the general prohibition on unfair trading practices in the Bill would target conduct that manipulates consumers or unreasonably distorts their decision‑making environment and causes, or is likely to cause, detriment.  However, that protection would not be extended to businesses.

Treasury’s June 2026 consultation paper now considers whether similar protections should be extended to small businesses and franchisees. As Treasury notes:

…in certain transactional contexts, some small businesses face many of the same vulnerabilities as consumers when acquiring goods or services from large businesses.

This consultation follows earlier work on unfair trading practices, the expanded unfair contract terms regime, and the Government’s focus on bargaining power imbalances in markets such as franchising, supermarkets and digital platforms.

The consultation

Treasury is seeking feedback on two fundamental issues:

1. Should the general unfair trading practices prohibition be extended to protect small businesses when they acquire goods or services as consumers?
2. Should additional protections be introduced to address unfair trading practices in broader business-to-business dealings?

The paper also examines whether existing ACL, competition law and industry codes sufficiently address harmful conduct, or whether further intervention is warranted.

Submissions close on 10 July 2026.

Key features of the proposal

Extending the consumer prohibition to small businesses

Treasury is exploring extending the general prohibition on unfair trading practices so that small businesses have the same protections as individual consumers.

The prohibition would protect a small business in relation to the acquisition, or potential acquisition, of goods or services where:

• the price is under $100,000
• the goods or services are of a kind ordinarily acquired for personal, domestic or household use
• the goods are vehicles or trailers used principally to transport goods on public roads.

In this context, a small business would be defined consistently with the unfair contract terms regime, being those with fewer than 100 FTE employees or turnover under $10m.

However, the protection would not apply where the small business is acquiring, or holding itself out as acquiring, goods:

• for the purpose of re-supply
• for the purpose of using or transforming them in trade or commerce in the course of a production or manufacturing process
• for repairing or treating other goods or fixtures on land.

Business-to-business unfair trading practices

Treasury is also seeking evidence on unfair practices in broader commercial dealings as it considers whether it would be appropriate to introduce an economy-wide unfair trading practices prohibition that applies to business-to-business conduct.

The consultation paper also highlights that:

…submissions have consistently identified harmful practices affecting small businesses, particularly in situations involving information asymmetries and significant imbalances in bargaining power.

Treasury emphasises that any extension must be proportionate, targeted and compatible with existing frameworks. The consultation paper seeks evidence on the prevalence and impact of unfair practices, the adequacy of existing protections, and the potential economic consequences of reform. Treasury is seeking evidence of:

• the types of conduct causing harm
• the prevalence and financial impact of unfair practices
• whether protections should extend beyond small business (e.g. any franchisee)
• whether existing ACL prohibitions (misleading conduct, unconscionability, UCTs) and industry codes already address the issue
• whether protections should apply only where there is a clear bargaining power imbalance.

Treasury also acknowledges the risks of over‑regulation, noting that:

…a new provision could also have costs, such as higher compliance costs and higher input costs which could result in higher prices for consumers. It could also reduce flexibility in contracting, which could lead to worse outcomes for one or both trading parties and reduced allocative efficiency. There is also a risk that it could have a chilling effect on efficient bargaining relationships including by interfering with legitimate commercial conduct.

If a prohibition were drawn too broadly, there is a risk that ordinary commercial negotiation, price setting, and contract management could be inadvertently constrained. This may reduce flexibility, increase transaction costs, and impede efficient allocation of risk in supply chains.

Implications for business

This consultation signals a clear direction of travel. Businesses that engage with small business counterparties – particularly those with significant bargaining power – should be assessing their practices now rather than waiting for legislation to land.

The deadline for submissions is 10 July 2026. Gadens advises businesses across the consumer, retail, franchising and digital sectors on the evolving unfair trading practices framework. We can assist you to:

• understand the implications of the Bill as currently drafted
• assess potential exposure under the proposed extension to small businesses
• in the development of submissions responding to Treasury’s consultation
• review product, pricing, contracting and customer-journey practices for compliance risk
• develop forward-looking compliance strategies aligned with the Government’s broader fairness agenda.

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Authored by:

Adam Walker, Partner