ACCC finalises class exemption enabling small businesses to collectively bargain

An ACCC 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.

The class exemption will allow:

• businesses with an aggregated turnover of less than $10 million in the preceding financial year to collectively bargain with customers or suppliers; and 
• franchisees and fuel retailers to collectively bargain with their franchisor or fuel wholesaler (respectively) regardless of their size

The ACCC explained that 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.

Currently this is only available via the ACCC’s ‘authorisation’ or ‘notification’ processes, but this new class exemption will remove the need for most small businesses to use those processes.

“We hope this class exemption will help a range of Australian small businesses and franchisees,” ACCC commissioner Stephen Ridgeway said.

“There can be 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.”

Mr Ridgeway also pointed to the 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,” he said.

The class exemption will apply to businesses and independent contractors who form, or are members of, a bargaining group, and who each had an aggregated turnover of less than $10 million in the financial year before the bargaining group was formed.

According to the ACCC, this will cover more than 98 per cent of Australian businesses.

In addition, all franchisees and fuel retailers governed by either the Franchising Code of Conduct or the Oil Code of Conduct will also be able to collectively negotiate with their franchisor, regardless of their aggregated turnover. 

The watchdog explained that bargaining groups will have to fill out a one-page form and provide it to the ACCC, following which legal protection from competition laws will commence automatically. There will, however, be no fee for lodging the form.

“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,” Mr Ridgeway said.

The ACCC confirmed it will release further information about the class exemption, including the form businesses need to lodge with the ACCC and a guide to using the class exemption, in early 2021 when the class exemption becomes available for use.