I have previously supplied goods to a customer who has been consistently late in paying me and he only pays after numerous attempts to recover payment. This has been going on for a period of 2 years. He has become rude and difficult to deal with and I have heard from industry contacts that he has also been bad-mouthing my business and the quality of my products. Initially I needed his business because I was just starting out. My company has since been doing quite well and I no longer need or want to deal with this customer so I refused to fill his latest order. He told me that it was illegal to refuse to supply him with goods and that he will be reporting me to the Australian Competition and Consumer Commission (ACCC) if I stop doing business with him. Will I be breaking the law if I refuse to supply him?
Lawyer Answers (1): Answers from lawyers are general preliminary responses. They are not formal legal advice and cannot taken account of all your circumstances. They do not create a lawyer–client relationship.
Answer by Dilani Mudalige, Yokine 6060 WA
- As a supplier you generally have the freedom to choose who you do business with as long as the refusal to supply is not intended to and is not otherwise likely to substantially reduce competition.
- However there are some situations where a supplier’s refusal to supply goods or services is illegal such as when the supplier is:
- involved in a collective boycott;
- misusing their market power;
- engaging in exclusive dealing;
- imposing minimum resale prices on its retailers; or
- acting unconscionably.
- Based on the situation you have described your refusal to deal with this customer is based on his late payments and conduct. It is unlikely that your refusal would be considered anti-competitive or illegal.
- If your company has substantial market power it will be worthwhile having a lawyer assess the specific circumstances of your case including any contracts that might be involved. A lawyer who is experienced in competition and trade practices law will be able to assist you in evaluating whether you are at risk of any misuse of market power.