ACCC calls on retail tenants to consider collective bargaining with landlords

Retail tenants should consider taking advantage of collective bargaining to strengthen their position when negotiating leases with landlords, Australian Competition and Consumer Commission Chairman, Mr Graeme Samuel, said today*.

Retail tenancy issues were an area of importance to small businesses with concerns that smaller players were perhaps not getting as fair a deal as they thought they should in some circumstances.

But there were proactive steps small businesses could take to improve their own position in this area.

"I remain perplexed as to the unwillingness of [shopping] centre tenants to engage in some form of collective bargaining with centre landlords – for surely this approach would offer a strengthened negotiating hand to tenants in their lease dealings," he said. "…I'm somewhat bewildered, and indeed frustrated, that small businesses have not yet taken advantage of the improvements to the collective bargaining system.

"Not only has the ACCC vastly simplified accessibility to these provisions through streamlining of our processes for authorisation of collective bargaining arrangements and recent changes to the TPA [Trade Practices Act] have also brought about a significant, new advantage to groups of small business."

Mr Samuel said it was important to remember that market forces played a central role in determining prices for areas like the amount of rent a business must pay.

"One of the major complaints the ACCC hears from retail tenants is that they object to providing their turnover details to landlords. We must remember that in some cases this information can be useful to a shopping centre when assessing possible future development and the tenancy structure that in turn assists with the success of the centre.

"Second, we often hear that tenants are unhappy at not being able to discover the rents paid by neighbouring traders. This is not always strictly true, as NSW, Queensland and the ACT have compulsory retail leasing registers, and it can be as simple as searching these publicly available registers. Other states also make some limited information available.

"Where details are not readily searchable, landlords such as shopping centres might want to consider publishing rental tenancy information on their websites, where the tenant concerned gives their consent.

"It is my understanding that landlords generally do not oppose disclosing such terms and conditions, and this could become a voluntary process on the part of individual landlords or indeed in the case of shopping centres, an industry-wide code.

"Such a code would in fact go a long way to avoiding further need for regulation in the sector," Mr Samuel said.

Background

*Mr Samuel was addressing the National Small Business Summit on Competition and fair trading: a fair go for small business in Sydney. The speech will be available on the ACCC website, under News Centre, Speeches.