The ACCC is seeking feedback about a potential ‘class exemption’ to allow small businesses, agribusinesses and franchisees to negotiate collectively with their customers or suppliers, including franchisors.
The ACCC discussion paper published today sets out how a collective bargaining class exemption could operate, who would qualify, and what conditions would apply.
Collective bargaining by a group of businesses is currently not allowed under Australian competition law, unless the group first obtains formal approval from the ACCC. A collective bargaining class exemption would provide a ‘safe harbour’, so businesses that qualify can collectively bargain without the risk of breaching competition law.
“Businesses can sometimes be better off negotiating with their customers or suppliers as a group. Working together, they may be able to negotiate more efficiently with larger businesses to achieve better terms and conditions than they can on their own,” ACCC Deputy Chair Mick Keogh said.
“Businesses can already seek case-by-case legal protection to collectively bargain through an ACCC ‘authorisation’ or ‘notification’, but this requires the group to submit an application with supporting information and pay a lodgement fee. These processes are public and can take a number of months to finalise,” Mr Keogh said.
“In contrast, once a collective bargaining class exemption is in place, eligible businesses would automatically get an exemption. This would allow those businesses to gain easier access to the benefits of collective bargaining and begin negotiating sooner.”
“Over the years the ACCC has considered many collective bargaining arrangements. Most come from groups of primary producers or other small businesses wanting to collectively bargain with a larger business; for example, farmers wanting to bargain with the company who buys their produce.
“This has given us a good evidence base about the types of collective bargaining that produce public benefits and are unlikely to harm competition, and are therefore likely to be suitable for this exemption,” said Mr Keogh.
The discussion paper is available at: Collective bargaining class exemption
The ACCC is inviting feedback on these issues by 21 September 2018.
From 6 November 2017, the ACCC has the power to make ‘class exemptions’ for specific types of business conduct.
This new power is in addition the ACCC’s existing authorisation and notification processes that allow businesses to seek legal protection for arrangements that risk breaching competition law.
Collective bargaining is the first type of class exemption the ACCC is considering under this new power.
The ACCC says it can make a class exemption if it is satisfied that the conduct (for example, small business collective bargaining) is unlikely to substantially lessen competition or likely to result in a net public benefit.
A 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. It would simply mean 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. The target would still be free to elect to continue to negotiate with each member of the group individually.
Businesses that fall outside the scope of the class exemption (for example, larger businesses or those with more complex arrangements) would still be able to use the authorisation and notification processes to seek legal protection to collectively bargain on a case–by-case basis.
The ACCC will therefore ensure that any class exemption it makes only applies to collective bargaining conduct that meets these requirements.
If, following a review of submissions received, the ACCC decides to proceed with a class exemption for collective bargaining, it says it will engage in a second round of public consultation about the form it is proposing that the class exemption will take, including how it is proposing to define eligibility for the class exemption, before making a final decision.