AADA has welcomed the decision of the Australian Competition and Consumer Commission (ACCC) to allow franchisees to collectively negotiate with car Manufacturers without ACCC approval.

This is a welcome and important development for franchised new car Dealers as it provides them and their representative Dealer Councils with the opportunity to raise their shared concerns with the Manufacturers they are franchised to.

AADA CEO James Voortman commended the ACCC on recognising the importance of allowing franchisees to be able to negotiate more effectively and efficiently as a group.

“Franchised new car Dealers have huge trouble negotiating with their large offshore multinational franchisors, given the substantial differences in size and power of the parties involved. This is made even worse when individual Dealers have to try and negotiate alone. This class exemption provides Dealers with a much more effective and efficient negotiation tool and avoids Dealers having to navigate through complex red tape and administrative burdens to obtain collective bargaining rights,” Mr Voortman said.

“We are delighted that our members can now utilise this exemption, which will be especially useful for Dealer Councils when they are negotiating Dealer Agreements. The New Car Retailing Industry Market Study of 2017 gave the ACCC a good understanding of the imbalanced relationships that exist in auto franchising and this class exemption, which is the first of its kind, will go some way into correcting that imbalance.”

The new class exemption will be available to franchisees from early 2021.
In late October, the ACCC issued a draft determination proposing to grant authorisation to enable the National Honda Dealer Council and a group of Honda Dealers to discuss and collectively negotiate with Honda Australia in relation to issues arising from Honda Australia’s termination of existing Dealer agreements and their replacement with a new agency model.

“The ACCC considers the arrangements are likely to result in some public benefits, including transaction cost savings for all parties, and limited public detriment. Legal protection is sought because such collective negotiations may otherwise breach competition laws, since Honda Dealers are in competition with each other in relation to certain products and services,” an ACCC statement said.

The ACCC proposes to grant authorisation until 31 July 2026.

The ACCC invited submissions in relation to the draft determination by 13 November 2020, and will make its final determination in December.