Introduction

Collective bargaining enables businesses to protect their mutual interests by allowing them to negotiate agreements as a group. Australian competition law currently prevents businesses from collectively bargaining unless formal approval is given by the ACCC.

“Businesses can sometimes be better off negotiating with their customers or suppliers as a group. Working together, they may be able to negotiate more efficiently with larger businesses to achieve better terms and conditions than they can on their own,”
-ACCC Deputy Chair Mick Keogh.

The ACCC now has the power to make ‘class exemptions’. The ACCC’s consideration of a ‘class exemption’ in its Discussion Paper dated 23 August 2018 would allow business groups, such as Dealers and national dealer councils, to protect their interests by negotiating as a group, without fear of breaching competition law. The exemption considered would not force anyone to join a collective bargaining group.

Key policy points

The AADA lodged a submission on behalf of Dealers on the ACCC Discussion Paper. It advocated that all franchisees should be able to bargain collectively with their franchisor, regardless of size or corporate structure. The basis for this position stems, not from the objective size of the businesses involved, but from the relative power/size relationship between franchisee and the franchisor.

As the discussion continues and the details emerge, new issues will require examination and consideration. For example:

A class exemption for Dealers would need to include the negotiation of the terms and conditions of Dealer Agreements as part of the authorised conduct, and
A class exemption should mandate that the franchisor deal with the bargaining group, anything less would make the bargaining group a ‘toothless tiger’.

Collective boycott

The ACCC is not considering a class exemption for collective boycott conduct. A collective boycott would, for example, allow a dealer group or dealer council to refuse to buy vehicles from a distributor; however, ideally a softer alternative boycott option should be considered in the longer term. This option may, for example, enable the bargaining group to boycott the entering of a new unfair agreement but not an already existing agreement. This may offer a necessary balance between franchisees protecting their interests and ensuring that existing arrangements are honoured as well as not harming competition.

Conclusion

Class exemptions could be very useful for the purpose of correcting power imbalances between Dealers and distributors. Class exemptions should include all Dealers. Any limitations imposed based on objective size would fail to recognise the main problem which is the relative size and power imbalance between Dealers and distributors. Accordingly, this is the primary focus for Dealers in the short term, with further protections being the focus in the longer term.

For further information, contact Vinesh George
on 0404 077 078 or email vinesh@vsgeorge.com.au

 

Vinesh George
Company Secretary and Legal Counsel, AADA | Principal,
VS George Lawyers