ACCC to permit small businesses to collectively bargain

The Australian Competition and Consumer Commission (ACCC) announced late last year that it would be introducing the first class exemption for collective bargaining in early 2021, permitting small businesses, franchisees and fuel retailers to negotiate together with their suppliers, processors, franchisor or fuel wholesaler without requiring approval to do so from the ACCC.

Under the current legislative regime collective bargaining may be unlawful unless the businesses first seek and are given, an exemption from the ACCC. Collective bargaining refers to the practice where a business gets together with its competitors to negotiate with a common customer or supplier over the terms of their business relationship (for example, conditions or prices). This conduct is generally prohibited and is a breach of the competition laws.

By giving small businesses, franchisees and fuel retailers a general exemption for collective bargaining, businesses of those kinds will have more flexibility in how they negotiate with key businesses in their supply chains. Groups of eligible businesses who choose to collectively bargain after the exemption comes into effect may be able to share the time and cost of negotiating contracts, and have more bargaining power in determining what terms are offered. It may also offer a simpler negotiation process for all parties involved.

It is expected that this change will apply to more than 98% of Australian businesses.

How does it work?

To take advantage of the exemption, small businesses, franchisees and fuel retailers will need to form bargaining groups. Each bargaining group will need to complete a simple, one page form and provide it to the ACCC. After doing so, the group will automatically have protection from the collective bargaining laws.

The exemption will be available to:

• businesses and independent contractors who form, or are members of, a bargaining group and each member has an aggregated turnover of less than $10 million in the financial year before the bargaining group was formed; and
• franchisees and fuel retailers governed by either the Franchising Code of Conduct or the Oil Code of Conduct, irrespective of their aggregated turnover.

If a business does not fall into one of these categories, it can still apply for authorisation from the ACCC to undertake collective bargaining, which application the ACCC will assess on a case by case basis.

Although this change will permit a supplier, purchaser, franchisor or fuel wholesaler to negotiate with a bargaining group instead of each individual business, it does not make it mandatory for them to engage with the bargaining group.

The exemption has not yet come into effect, but is expected to early this year.

This article provides general comments only. It does not purport to be legal advice. Before acting on the basis of any material contained in this article, we recommend that you seek professional advice.