The Australian Competition and Consumer Commission (ACCC) has said it will now allow small businesses to collectively bargain with suppliers and processors without the need for formal approval.
The ACCC says its class exemption will allow small businesses to collectively bargain to ensure they’re able to remain competitive, and represents the first class exemption introduced by the ACCC.
The ACCC says that “a class exemption due to commence in early 2021 will allow small businesses, franchisees and fuel retailers to collectively negotiate with their suppliers and processors, franchisor or fuel wholesaler respectively, without first having to seek ACCC approval.”
“Although collective bargaining by small businesses generally does not harm competition, it involves competitors acting together, and those businesses therefore require some form of exemption to avoid the risk of breaching competition laws,” the competition watchdog continued to explain.
“There are many benefits for businesses negotiating as a group rather than individually, including sharing the time and cost of negotiating contracts, and potentially giving group members more of a say on contract terms and conditions,” ACCC Commissioner, Stephen Ridgeway
The class exemption will apply to small businesses and independent contractors that either form, or become members of a bargaining group made up of organisations with less than $10 million in annual turnover.
These collective bargaining groups will be required to fill out a one-page submission to the ACCC, with no fees attached for the submission.
The ACCC says that this exemption will apply to more than 98% of Australian businesses and organisations, who, as it stands, are required to either request authorisation or to notify the ACCC.
This will be removed by early 2021.
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The ACCC’s Commissioner, Stephen Ridgeway has said that “we hope this class exemption will help a range of Australian small businesses and franchisees.”
“There are many benefits for businesses negotiating as a group rather than individually, including sharing the time and cost of negotiating contracts, and potentially giving group members more of a say on contract terms and conditions,” Ridgeway said.
“There are often also time and cost savings for the suppliers or franchisor the group is bargaining with. This change will mean the benefits for all parties can be gained through a much simpler and quicker process.”
The ACCC also says that franchisees and fuel retailers currently under the mandates of the Franchising Code of Conduct and/or the Oil Code of Conduct will be able to collectively negotiate with their franchisor, regardless of their aggregated turnover.
“The class exemption will also increase levels of awareness among small businesses about the potential benefits of collective bargaining which, along with the simpler process, may encourage more businesses to collectively bargain,” The ACCC’s Stephen Ridgeway continued to explain.
The ACCC says that these introductions do not mandate that small businesses join a collective bargaining group, “it simply means that the group can collectively bargain with the supplier or franchisor on a voluntary basis without needing to worry about a possible competition law breach.”
“Businesses that fall outside the scope of the class exemption (for example, larger businesses or those with more complex arrangements) will still be able to use the ACCC’s authorisation and notification processes to seek legal protection to collectively bargain on a case-by-case basis.”