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ACCC Grants Small Business Collective Bargaining Exemption

The ACCC has granted a class exemption for small businesses and franchisees to collectively negotiate with suppliers and franchisors, without needing to first seek ACCC approval – due to commence in early 2021.

The collective bargaining exemption is the first class exemption to be introduced by the ACCC.

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

“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.”

Whilst collective bargaining by small businesses is not deemed to generally harm competition, it does involve competitors working together with some form of exemption required to about breaching competition laws.

The new class exemption will remove the need for most small businesses to use the ACCC’s ‘authorisation‘ or ‘notification‘ processes.

“There are often also time and cost savings for the suppliers or franchisor the group is bargaining with,” adds Ridgeway.

“This change will mean the benefits for all parties can be gained through a much simpler and quicker process.”

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

The consumer watchdog states this will cover more than 98% of Australian businesses.

All franchisees governed by the Franchising Code of Conduct are also said to be able to collectively negotiate with their franchisor regardless of 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,” states Mr Ridgeway.

The ACCC is set to release more information about the class exemption, including a simple one page form to lodge with the watchdog, in early 2021 when the exemption becomes available for use.

Further information and conditions are available on the ACCC’s website here.

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