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Australian businesses receive new bargaining power

Small businesses, franchisees, and fuel retailers from today can negotiate with suppliers as a collective, without seeking ACCC approval.

The first of its kind class exemption applies to businesses and independent contractors who form, or are members of, a bargaining group, and who each had turnover of less than $10 million in the financial year before the bargaining group was formed. This covers more than 98 per cent of Australian businesses.

Under the arrangement, small businesses and farmers can bargain with their suppliers and processors, eligible franchisees will be able to collectively negotiate with a franchisor, and eligible fuel retailers will be able to collectively negotiate with a fuel wholesaler.

“This class exemption will help the majority of small businesses and franchisees, including groups of farmers wanting to bargain with the companies who buy their produce, and small businesses wanting to jointly buy electricity,” ACCC Deputy Chair Mick Keogh said.

“When they bargain collectively, businesses can share the time and cost of negotiating contracts and have more say when negotiating.”

While collective bargaining by small businesses does not generally harm competition, when competitors act together, they require some form of exemption to avoid the risk of breaching competition laws.

Previously, exemptions were only available case-by-case, through an ACCC ‘authorisation’ or ‘notification’. This new class exemption removes the need for most small businesses to use those processes.

The class exemption process is quicker and easier and allows eligible groups to obtain protection from competition law for bargaining free of charge, simply by providing a one-page notice to the ACCC.

“The counterparties that small business groups collectively bargain with can also benefit from time and cost savings, because they will not have to negotiate with each business individually,” Keogh said.

More information about the class exemption can be found at Collective bargaining class exemption.

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