Business Alliance · Joint no. 05

Finger joint

Bargaining as a group, under the ACCC’s class exemption

Competitors who negotiate together with a supplier or customer risk breaking competition law unless an exemption covers them. The ACCC says most collective bargaining by small business is covered by its class exemption, for businesses with turnover under $10 million in the previous financial year, franchisees negotiating with their franchisor and fuel retailers negotiating with their wholesaler.

General information, not legal adviceThe ACCC says it doesn’t take part in collective bargaining negotiations or decide contract terms, and it doesn’t give legal advice. The official places to check are its collective bargaining page and the Determination itself.

What “collective bargaining” means here

The phrase usually brings employees and employers to mind. The ACCC points out that in competition law it has a special meaning: 2 or more competitors coming together to negotiate with a supplier or customer, which it calls the target business, over terms, conditions and prices. The group sometimes appoints a representative, such as an industry association, to negotiate for it.

According to the ACCC, a group that negotiates together may spend less time and money doing it, gain more say over the terms and conditions it gets, and work more efficiently. It adds that the target business can gain as well: negotiating costs it less, it gets better information, and supply becomes more certain. Many fingers, one joint: that is the shape of it.

The class exemption is a legal instrument made by the ACCC in 2020, registered as F2020L01334 on the Federal Register of Legislation (this guide calls it the Determination). It commenced on 3 June 2021 and is in force until 30 June 2030, though it notes it could be revoked sooner. Once a class exemption is in place, the ACCC says businesses can self-assess whether their planned activity is covered, without applying separately.

The glue-up, in order

These are the Determination’s conditions, set out in the order a group meets them. Miss one and the exemption may not cover what the group does.

  1. Check that each member can join

    There are three ways in. A business qualifies if it reasonably believes its aggregated turnover in the previous financial year was less than $10 million. A franchisee qualifies when it bargains with other franchisees of the same franchisor, with that franchisor as the target, whatever its turnover. A fuel retailer qualifies when it bargains with related fuel retailers, with their fuel wholesaler as the target.

  2. Be clear about the target and the deal

    The members’ agreement to bargain together has to be about supplying goods or services to the target, or acquiring them from it, and be made for the purpose of collectively negotiating with it. Deals for goods or services for the target’s personal, domestic or household use are not covered. Each turnover-based member must also reasonably expect to make a contract with the target about those goods or services.

  3. Lodge the notice with the ACCC

    The exemption applies only once a notice, in the form the ACCC approves, has been given to it. Any member, or someone acting for them, can lodge it, but not a trade union, a union officer or a person acting on a union’s direction. Conduct is covered from the date the notice is given, or from no more than 14 days before. The ACCC publishes the notice form on its collective bargaining page.

  4. Give the target a copy

    Negotiating with the target, making a contract with it and carrying that contract out are covered only if a copy of the notice has been given to the target. Any member of the group can give it.

  5. Share only what the bargaining needs

    Sharing information among the members, or using information others have shared, is covered only if it is for the bargaining and the business believes it is reasonably necessary for that purpose. Sharing beyond that falls outside the exemption, and the general rules in working beside a competitor apply to it.

  6. Don’t turn it into a boycott

    The exemption doesn’t apply where the members’ agreement includes a provision meant to prevent, restrict or limit supplying to, or buying from, the target. The ACCC calls that a collective boycott, and says a different type of exemption is needed for it.

Weathered log ends interlocking at the corner of an old timber wall, each showing its growth rings
Many log ends, one corner. Photo by Antranias on Pixabay

When the class exemption doesn’t fit

Businesses and activities it doesn’t cover can still seek protection from the ACCC by lodging a notification or applying for authorisation. The ACCC describes notification as the simpler of the two, but says it can only be used by businesses other than trade unions, and for transactions below certain amounts. It assesses collective bargaining notifications by asking whether the likely public benefit will outweigh the likely public detriment, and notifications are published on a public register.

Before lodging a notification, the ACCC suggests checking whether the arrangement is already covered by the class exemption. The current lodgement fees and thresholds are on its notification page.

Franchisees bargaining together

Franchisees have their own route into the exemption, whatever their turnover, as long as they are bargaining with their own franchisor alongside other franchisees of that franchisor. The wider rules of that relationship are in franchising in plain words.