The Australian competition watchdog has launched legal proceedings against Fuji Xerox, alleging that the Japanese tech giant’s contracts with local SMEs contained nearly 200 unfair terms.

The Australian Competition and Consumer Commission (ACCC) instituted proceedings in the Federal Court against the multinational’s local printing company Fuji Xerox Australia, claiming that nine of its standard form small business contracts contain 173 unfair contract terms.

Within this, the ACCC alleges there are 31 different terms included which are “unfair”, including automatic renewal terms, excessive exit fees and unilateral price increases.

ACCC deputy chair Mick Keogh said the competition watchdog has received several complaints from SMEs over Fuji’s contracts.

“We have received a number of complaints from small businesses alleging that some of the terms in Fuji’s contracts have caused them significant financial harm,” Keogh said.

“Some of the unilateral variation terms allow Fuji to modify contracts by creating new rights and obligations, including increasing prices, without notifying its customers and without giving them any corresponding right to negotiate or reject.

“The ACCC will argue that the unfair terms in these contracts cause a significant imbalance in the rights and obligations of Fuji and the small businesses they contract with.”

Fuji supplies a range of products to SMEs on a lease basis, including photocopiers, scanners and printers.

The terms in question have been used in contracts between Fuji and Australian SME customers for the supply of printing goods and services and technical assistance since at least October 2018.

Under Australian Consumer Law, it is not illegal for businesses to include or rely on an unfair contract term against consumers or small businesses, but the ACCC is advocating to change this and make it against the law.

The ACCC is seeking declarations that the terms in the existing contracts between Fuji and its SME customers are “unfair” and therefore void.

It is also going after an injunction to stop Fuji from relying on those terms in current and future contracts, along with an order for a corrective notice, compliance program and costs.

Australian Small Business and Family Enterprise Ombudsman Kate Carnell welcomed the launch of legal proceedings by the ACCC.

“My office has received a number of complaints from small businesses customers of Fuji Xerox and other companies in the printing industry more broadly,” Carnell said.

“The ACCC is currently not able to determine if a clause amounts to an unfair contract term. Instead, the regulator needs to seek a determination from the court.

“My office continues to recommend enhanced capabilities of regulators to determine if terms are unfair and for significant penalties and infringement notices to apply to breaches. We maintain that unfair contract terms need to be illegal and the penalties should be large enough to act as an effective deterrent.”

This is crucial for ensuring SMEs can compete with larger rivals and aren’t unfairly disadvantaged by the contracts they have to enter into, Carnell said.

“By making unfair contract terms illegal, the ACCC would be able to penalise big businesses,” she said. “Small businesses have been waiting for changes to level the playing field for too long.”

The court action should be a wakeup call for others in the industry to evaluate their own contracts, Keogh said.

“This court action by the ACCC should prompt all other traders in the printing support industry to review their standard form contracts and make any necessary changes to remove unfair contract terms,” he said.

The ACCC has also been taking on tech giants Google and Facebook through its digital platforms inquiry. The competition watchdog also launched its report into Google and Apple app marketplaces last month, calling for submissions from consumers and app developers.