Smaller businesses can sometimes benefit from negotiating with their customers or suppliers as a group (referred to as “collective bargaining”). Working together, they may be able to negotiate more efficiently with larger businesses, and achieve better terms and conditions, than they can on their own. However, without some form of legal protection, this kind of joint bargaining would be at risk of breaching competition laws.
Small businesses seeking to engage in collective bargaining have been able to do so in the past but were required to present an argument for such arguments to the ACCC for ‘Authorisation’. This process required the businesses to submit a formal application to ACCC that then required ACCC to notify all affected stakeholders and make a final decision based on any feedback received from any opponents to the proposed grouping.
One of the themes from the 2018 Joint Parliamentary Review of the operation of the Franchise Code (and Oil Code) was that there was a need to consider legislative opportunities to strengthen the commercial bargaining position of small businesses who were engaging in commercial relationships with bigger businesses. For example, prospective franchisees negotiating with Franchisors.
The ACCC published a new draft mechanism that would make it easier for small businesses – including fuel retailers – to enter collective bargaining arrangements in mid-2019. The mechanism proposed a simple application (or registration) process rather than the formal application of the past but would only be available in situations where the combined turnover of the businesses entering into the agreement was less than $10M – or in certain types of industries without any cap, including fuel retailers.
The proposal was then put out for formal consultation in June 2019, with comments received to be used in the finalisation of the new laws for market use in the future.
“ACAPMA’s position was that these new laws would likely increase the opportunity for small fuel retailers to band together to source the best possible wholesale price for fuel (and convenience supplies in some cases) – and that was a good thing”, said ACAPMA CEO Mark McKenzie.
Written by ACAPMA and COSBOA