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While competition law strictly prohibits competitors acting together or agreeing on prices, collective negotiation by small businesses, franchisees and fuel retailers has traditionally been considered beneficial as it can address significant imbalances in bargaining power, achieve cost savings and streamline negotiating processes.
Small businesses, franchisees and fuel retailers however have needed to seek authorisation or notification from the ACCC to engage in such conduct which has required them to demonstrate that the public benefits of collective negotiation outweigh any anti-competitive detriments. The cost and burden of these regulatory processes may have previously precluded small businesses, franchisees and fuel retailers acting in concert when they may otherwise have wished to do so.
But this will soon change.
From early 2021, small businesses, franchisees and fuel retailers will be allowed to collectively negotiate terms and conditions including price with suppliers, processors, franchisors and fuel wholesalers.
The class exemption applies to any small business that has an aggregate turnover of less than $10 million in the previous financial year. For franchisees and fuel retailers however there is no monetary threshold – any franchisee or fuel retailer can collectively negotiate with franchisors, fuel wholesalers etc.
In order to collectively negotiate, the representative of the relevant small businesses, franchisees or fuel retailers will simply need to provide a notice to the ACCC and the party with which they wish to collective negotiate. The collective negotiation conduct is then exempt and applies from 14 days prior to the lodgement of the notice (to exempt any pre-discussing between those parties). The notice is placed on the ACCC’s public register.
You should undertake the following steps now in preparation for the new class exemption:
Regardless of the approach you take to any request for collective negotiation, you should train relevant staff to ensure they are understand the parameters of the conduct that small businesses, franchisees or fuel retailers can and cannot engage in.
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