Refusing to supply another business
As a business owner, you can generally decide who you want to do business with, but in some circumstances you could be breaking the law if you refuse.
Whether you’re a supplier, manufacturer, wholesaler, or distributor, it’s a good idea to understand when refusing to supply is allowed and when it’s against the law.
When refusing is allowed
You can refuse to supply goods or services to a business if you have a good reason, such as:
- you already have too many customers and don’t have the resources to take on more
- the business is unreliable when it comes to paying invoices
- delivering to the business would be too expensive
- the way the business presents or displays goods or services doesn’t suit your brand.
If you refuse to supply goods or services to a business based on reasons like these, that business can either:
- negotiate with you until you both agree to the terms, or
- find another supplier.
When refusing is against the law
When you refuse to supply goods or services to a business, you may be breaking the law if you:
- misuse your market power
Example: You refuse to supply a business to stop the business from entering into a market.
- take part in a boycott
Example: You, together with your competitors, are refusing to supply a business to force them to accept certain conditions.
- try to force minimum resale prices on retailers
Example: You refuse to supply a business in order to put pressure on them to sell your goods or services at a particular price.
- deal exclusively
Example: You refuse to supply a business in an attempt to restrict who they deal with, or the way they carry out their dealings.
- act unconscionably
Example: Your refusal to supply is too harsh or clearly unfair and unreasonable, compared to social norms.
If you think you have a good reason to take part in a boycott or deal exclusively, you can apply for an exemption from the Australian Competition and Consumer Commission (ACCC).
When refusing is discrimination
You also could be breaking the law if you discriminate by refusing to supply because of the age, sex, race, or disability of someone in the business.
Sometimes, however, being discriminatory isn’t against the law. To find out what these circumstances are and more about discrimination, check out our Can businesses refuse customers? article.