ACCC proposes collective negotiating for small businesses and franchisees

The competition watchdog is pushing for small businesses and franchisees be able to collectively negotiate with suppliers and retailers without first having to seek its approval.

John Dagge,
June 6, 2019
Herald Sun

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Australia’s competition watchdog is pushing to make it easier for small businesses to collectively negotiate with suppliers and franchisors.

The Australian Competition and Consumer Commission has recommended small businesses and franchisees be able to collectively negotiate with suppliers, processors, franchisors and fuel retailers without first having to seek its approval.

Under existing rules groups of competitors wanting to join forces to negotiate must first receive formal approval from the ACCC.

The latest move by the ACCC to level the nation’s commercial playing field follows years of complaints that smaller businesses have been treated unfairly by major suppliers, particularly in the grocery and franchising sectors.

The proposed collective bargaining “class exemption” would apply to businesses and independent contractors with annual turnovers of less than $10 million.

Australian Small Business and Family Enterprise Ombudsman Kate Carnell. Picture: Kym Smith

Franchisees and fuel retailers governed by either the Franchising Code of Conduct or the Oil Code of Conduct would also be able to collectively negotiate with their franchisor regardless of their turnover.

The competition regulator says this would cover 98.5 per cent of Australian businesses.

Australian Small Business and Family Enterprise Ombudsman Kate Carnell said the proposal was “good news” for the sector.

“This proposal makes it simpler and cheaper for eligible businesses and franchisees to collectively negotiate if they choose,” she said.

“Franchisees in particular will see tangible benefits as they band together to bargain for better outcomes on pricing and contract terms.

“It’s another important step towards levelling the playing field for small business.”

ACCC deputy chair Mick Keogh said the suggested law change would apply to small businesses wanting, for example, to jointly buy electricity, or groups of farmers wanting to bargain with companies who bought their produce.

“Collective bargaining allows businesses to share the time and cost of negotiating contracts, and potentially gives them more of a say on contract terms and conditions,” Mr Keogh said. “These arrangements can also benefit the prospective business partner, because it can result in more efficient scheduling or delivery arrangements.”

Mr Keogh said the regulator’s proposal would make it much simpler and less expensive for eligible businesses or franchisees to collectively negotiate.

“However, the class exemption would not force anyone to join a collective bargaining group, or force a customer, supplier or franchisor to deal with the bargaining group if they did not want to,” he said.

Businesses not covered by the proposed exemption would still be able to ask the ACCC for the right to collectively negotiate, Mr Keogh said.

Council of Small Business of Australia executive director Peter Strong said the proposed rule change would be welcome by small and medium-sized players, particularly franchisees. “This has been an important issue for a very long time,” Mr Strong told Business Daily.

“Something needs to happen in this space.”

A draft of the proposed law change was released by the ACCC for public review on Thursday.

Submissions close on July 3.