By Darrell Choong (Trainee Lawyer) and Paul Welling (Principal Solicitor)
The gates of Troy have been breached! At least, they might be soon.
In a somewhat surprising turn of events, the ACCC is considering a class exemption for collective bargaining by eligible businesses, agribusinesses and franchisees. Currently, collective bargaining is only allowed if a business obtains permission from the ACCC.
What is collective bargaining?
In collective bargaining, two or more competitors work together to negotiate with a supplier or customer about terms, conditions, or prices, or a combination of all three.
Its cousin, collective boycotting, involves competitors agreeing not to acquire goods or services from, or supply goods or services to, a business with whom the group is negotiating, unless the business accepts the group’s terms.
Collective bargaining at present
Acting in such a way runs a very big risk of running foul of various provisions of the Competition and Consumer Act.
At present, businesses can only collectively bargain with customers or suppliers in two ways:
- authorisation; and
Authorisation is where a business applies on behalf of the collective bargaining group to obtain permission from the ACCC to engage in collective bargaining. However, the ACCC will only grant authorisation if it is satisfied that the likely public benefit from the collective bargaining outweighs the likely public detriment.
Alternatively, a business can rely on notification to avoid breaches of competition law. With notification, a business can lodge a collective bargaining notification with the ACCC on behalf of the collective bargaining group. If the ACCC does not object within 14 days (or 60 days for a boycott), the collective bargaining group can proceed.
Between 2007 and 2017, the ACC received 160 authorisation and notification applications, and granted or took no further action in respect of 147 of them. The rest were denied or withdrawn. It is therefore generally a successful procedure, but not a regularly used one.
Collective bargaining exemption
With the proposed class exemption, eligible businesses would not need to seek authorisation from, or lodge notifications with the ACCC. This would save time and effort in preparing the relevant documents for the ACCC and allow the benefits of collective bargaining to be obtained sooner.
The ACCC can only make a class exemption if it is satisfied that the collective bargaining:
- would not have the effect, or would not be likely to have the effect of substantially lessening competition; or
- would result in, or would be like to result in, a benefit to the public that would outweight any detriment.
The ACCC’s current thinking is to limit the class exemption to smaller businesses, and are considering a number of ways to limit the type of businesses:
- by the number of employees of each business in the group;
- the turnover of each business in the group; or
- the value of the contract that each member of the group expects to enter into.
For businesses that fall outside the exemption, they would have to go down the usual path of seeking authorisation or lodging a notification.
The ACCC hasn’t completely abandoned its skepticism of collective action though – the proposals would only relate to bargaining, not boycotts. Boycotts would still require authorization or notification.
The ACCC is currently seeking submissions from interested parties, and the deadline for submissions is 21 September 2018.
If you need advice on what the proposed amendments mean for your business, or want assistance on making a submission on why the proposed exemption is a great or terrible idea, please do not hesitate to contact us.