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Perspective

Motor dealers engaging in collective negotiations under new ACCC class exemption

An updated class exemption from the ACCC means eligible businesses will only need to submit a short form to confirm its intention to start negotiations, assisting franchised car dealers to negotiate with a distributor by enabling them to voice their shared concerns as a collective group.

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This update provides important recognition of the power imbalance in the dealer and distributor relationship and would be a considerable improvement on the present system, whereby distributors merely have discussions with dealer councils before they ultimately decide on the terms of a dealer agreement.

However, it is important to note that the exemption:

  • does not grant any right for dealers to collectively boycott or refuse to contract with a distributor; and
  • does not actually require a distributor to engage in negotiation with the group of dealers.

For these reasons, we are doubtful the exemption will assist dealers to negotiate fairer terms in their dealer agreements as the mere right for dealers to collectively approach a distributor to negotiate is not likely to provide any practical benefit.

Despite these shortcomings, the extension of unfair contract laws (UCLs) later this year, together with the release by the federal government of six voluntary best practice principles relating to the terms of new dealer agreements may create an opportunity for dealer councils to enter into collective bargaining with distributors.  We consider that these incremental regulatory changes, if fully considered and enforced by dealers with dealer councils, are likely to improve the one-sided nature of existing dealer agreements.

Terms of eligibility for collective bargaining

The following businesses can rely on the exemption to approach its supplier, franchisor or distributor:

  1. Where a business forms, or is a member of a bargaining group, each of the group members had an aggregated turnover of less than $10M in the financial year before the group was formed; and
  2. Any franchisee and fuel retailers governed by the Franchising Code of Conduct or the Oil Code of Conduct regardless of their aggregated turnover.

The ACCC announced this class exemption will be in place until 30 June 2030, with a review to be undertaken in 2029 to assess the operation the effectiveness of the exemption beyond the year 2030 (unless it is revoked earlier).

It is expected the ACCC will release further information about what information businesses must lodge with the ACCC with the notification form.

Negotiating fairer terms in dealer agreements

FCW Lawyers has experience in assisting dealers and dealer councils negotiate better and fairer terms contained in dealer agreements.  The recent addition of Robert Gardini, a consultant who specialises in the automotive industry to our motor dealers team enhances our service offering. Bob has spent many years advising leading industry associations and dealer groups enabling our team to leverage his expertise to work with dealers to refine and achieve their desired commercial objectives.

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