Bagging a bargain: New ACCC class exemption for small business and franchisee collective bargaining

Corporate & Commercial 21 June 2021

From 3 July 2021, if you are a small business or franchisee (including a fuel retailer) you can take advantage of the new class exemption which has been granted by the ACCC for collective bargaining.

The exemption means that eligible businesses and franchisee collectives are no longer required to seek an exemption from the ACCC, but can engage in collective bargaining with target businesses, provided a notice form is lodged with the ACCC and any target business.

What are the changes?

Collective bargaining takes place when two or more entities (who are competitors) come together to negotiate with a supplier, customer or franchisor over terms, conditions or prices in respect of goods or services.

Because such conduct can lessen competition, parties who seek to engage in collective bargaining must obtain an exemption from the ACCC to engage in the conduct.  This is either by way of an authorisation or a notification, depending on the proposed arrangement.  The ACCC then assesses and provides exemptions for arrangements on a case by case basis.

However, from 3 June 2021, if you are:

1. A small business collective (being made up of corporations that each have annual turnover of less than $10 million);

2. A franchisee collective (being franchisees as defined in the Franchising Code, regardless of aggregate turnover); or

3.  A fuel retailer collective (being retailers under a fuel re‑selling agreement regardless of aggregate turnover)

you are no longer required to obtain an exemption from the ACCC prior to engaging in collective bargaining, provided your collective lodges the relevant notice form as required by the ACCC.

This is the first exemption granted by the ACCC in respect of collective bargaining.  The ACCC, in providing this exemption, has taken a position that this type of conduct (by small business and franchisees) is generally deemed to not harm competition and can provide a net public benefit.

What do I do if I want to take advantage of this exemption?

If you a member of a collective who wishes to take advantage of the exemption, you will need to complete and submit to the ACCC the Collective Bargaining Class Exemption Notice Form.  This form must also be provided to any target business which your group wishes to collectively bargain with, at the time a member of the collective first approaches that target business.

Provided the form is lodged with the ACCC and provided to target business, and the collective meets the criteria for the class exemption, the collective has legal protection to collectively bargain.

What benefits can businesses obtain from collective bargaining?

Collective bargaining can provide benefits to both collective businesses/franchisees and target business.

For small businesses and franchisees, collective bargaining can:

1. reduce the time and cost for each individual business in putting in place an agreement with the target business;

2. increase access to information through the collective sharing of information, which may result in a more successful negotiation process;

3. potentially achieve more favourable commercial terms than individual negotiation;

4. create opportunities for access to new markets for the group as a whole; and

5. allow the collective to collectively qualify for discounts which may not be available to individual members.

For target businesses and franchisors, negotiating with a collective can also save time and money, as compared to undertaking negotiations with multiple individual businesses.  Additionally, collective negotiation means you will have the same arrangements with each collective member, which may streamline processes for invoicing and documenting agreements.

There is no requirement for any business to become part of a bargaining collective or for any target business to engage in negotiations with a bargaining collective if they do not wish to do so.

How can Coulter Roache assist?

If you would like further advice or assistance in relation to the class exemption for collective bargaining, including your collective’s eligibility to meet the class exemption requirements, please make contact with us to discuss your matter.

It may be your collective does not qualify for the class exemption.  This does not mean your collective is prevented from collective bargaining, however in these circumstances you must obtain an exemption from the ACCC.  We can assist you to determine whether a notification or authorisation is more appropriate for your circumstances, and assist you to make the appropriate application to the ACCC.

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If you require advice or further information in relation to this article, please contact our Corporate & Commercial team.

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