Collective bargaining class exemption

Summary

The ACCC has made a ‘class exemption’ that will allow:

  • businesses with an aggregated turnover of less than $10 million in the preceding financial year to collectively bargain with customers or suppliers, and 
  • franchisees and fuel retailers to collectively bargain with their franchisor or fuel wholesaler (respectively) regardless of their size

without them having to apply to the ACCC.

The class exemption will be ready for businesses to use in early 2021. The ACCC will announce when it is ready for use, and will also publish the notice form that businesses will need to lodge and the Guidelines for using the class exemption, at that time. Further details about next steps are provided below.

What is a class exemption?

A class exemption is a way for the ACCC to grant businesses an exemption from competition law for certain type of conduct that may otherwise risk breaching competition laws, but that:

  • do not substantially lessen competition, and/or
  • are likely to result in overall public benefits.

This class exemption relates to collective bargaining: a process that allows groups of businesses, including farmers, to jointly negotiate with their customers or suppliers over common issues (e.g. terms, conditions and/or prices). Negotiating as a group can allow businesses to share the time and cost of negotiating contracts, and potentially give group members more input into contract terms and conditions. There are often also time and cost savings for the suppliers or franchisor the group is bargaining with.

The class exemption will operate alongside the ACCC’s existing ‘authorisation’ and ‘notification’ processes, which a business who falls outside the class exemption could still use to seek legal protection.

The documents below provide background on the ACCC’s consultation in developing the class exemption.

Which businesses are eligible? 

The class exemption will allow:

  • a business or independent contractor with aggregated turnover of less than $10 million in the preceding financial year, to form or join a collective bargaining group to negotiate with suppliers or customers about the supply or acquisition of goods or services
  • franchisees to collectively bargain with their franchisor (regardless of the franchisee’s aggregated turnover), and
  • fuel retailers who have fuel re-selling agreements with the same fuel wholesaler, and operate under the same system or marketing plan determined, controlled or suggested by the fuel wholesaler or an associate of the fuel wholesaler, to collectively bargain with their fuel wholesaler (regardless of the fuel retailer’s aggregated turnover).

Bargaining groups will have to complete a simple, one-page notice and provide it to:

  • the ACCC, when the bargaining group is formed, and
  • each target business the group proposes to collectively bargain with, when they first approach the target business.

Details about how to access this form will be made available when the class exemption is ready for businesses to use.

The class exemption does not force anyone to join a collective bargaining group, or force a customer, supplier or franchisor to deal with the bargaining group if they do not want to. The target business will be free to continue to negotiate with each member of the group individually. The class exemption simply removes the risk that collective bargaining by eligible businesses will breach the competition law.

When will it be ready to use?

Now that the ACCC has made a decision to make the class exemption, there are a number of administrative steps that must take place.

The ACCC has lodged the class exemption legislative instrument and explanatory statement with the Office of Parliamentary Counsel for registration on the Federal Register of Legislation. Copies of the legislative instrument and explanatory statement are provided below.

The instrument must be tabled within six sitting days after registration. It is then subject to a Parliamentary disallowance period of 15 sitting days.

Once the disallowance period has passed the ACCC will set a commencement date for the class exemption. Precisely when this will occur is dependent on the Parliamentary sitting dates for 2021 which have not yet been finalised.

Initial public consultation

Consultation on draft legislative instrument

Legislative instrument

Document title Date

ACCC correspondence

Submissions

Consultation on draft legislative instrument

Initial public consultation