Federal Court rules Fujifilm Business Innovation Australia's small business contracts were unfair

The Federal Court has found that Fujifilm Business Innovation Australia, formerly Fuji Xerox Australia, had unfair terms in its small business contracts.

The Federal Court's ruling found that 38 of the terms in contracts Fujifilm BI Australia entered into with many thousands of small businesses were unfair, and declared the unfair contract terms void and unenforceable.

The contracts related to the lease of Fujifilm BI's range of business products, specifically with photocopiers, scanners and multifunction printers. In some cases, the company enters into contracts with small businesses as either a principal or an agent on behalf of a related firm called Fujifilm Leasing Australia.

Fujifilm BI was ordered to stop enforcing these terms in its current small business contracts and to stop using the terms in 11 types of standard form contracts with small businesses for the next five years.

The terms in question related to automatic renewal, excessive exit fees and unilateral price increases.

In 2020, the Australian Competition and Consumer Commission (ACCC) took Fujifilm, then still known as Fuji Xerox Australia, to court over the contract terms, following a number of complaints from small businesses. The agency also received a complaint from the Australian Small Business and Family Enterprise Ombudsman, specifically concerned with standard form contracts used across the printing industry more generally.

The company sought to get the case thrown out of court, but this request was dismissed in March 2021, allowing the case to go ahead as scheduled.

“We took this court action because Fuji’s unfair contract terms allowed this large company to leverage the significant power imbalance between it and small business customers to impose unnecessary and unjustifiable terms on these businesses,” ACCC deputy chair Mick Keogh said.

“Fuji’s unfair contract terms were imposed on many small businesses who had signed contracts containing these terms, and Fuji took action, including litigation, to enforce these terms.”

Keogh added that the agency is continuing to advocate for law reform to ban unfair contract terms and allow the court to penalise offending companies in cases where such terms are imposed and enforced on small businesses or consumers.

The Federal Court’s orders specifically relate to contracts entered into with small businesses employing fewer than 20 staff.

Fujifilm BI had entered into some 34,000 contracts since November 2016, most of which were made using the company’s standard form contracts, with most still in force. The ACCC said it does not know how many of the contracts were with small businesses, but said it was likely to comprise a substantial share.

The company has also been ordered to contact current customers with relevant contracts and ascertain if they are small businesses and make them aware of the orders, and it is also required to publish information about the orders on its website.

Fujifilm has also been ordered to pay some of the ACCC’s legal costs and implement a compliance program. The company has also admitted to the terms being unfair and has agreed to the declarations and orders made by the court.

In June, Fujifilm BI appointed former Brennan IT chief executive and NBN Co general manager of business expansion Stephen Sims as its new executive general manager.

Updated 14 August 2022: Fujifilm BI Australia released the following statement to CRN:

"A spokesperson for Fujifilm BI said the company acknowledged it had not met its own high standards in the instances identified by the Court.

"The spokesperson said it was no longer entering into contracts with small business customers based on any of the contracts identified by the Court. It had also introduced new contracts which are more balanced and beneficial for Fujifilm BI customers.

"Existing small business customers on one of the contracts identified by the Court will soon be contacted by Fujifilm BI and advised of the terms of their contract.

"Fujifilm BI hopes these orders will act as a catalyst for all traders in the print industry to review their standard form contracts and make any changes necessary to remove unfair contract terms."