Collective bargaining class exemptions in the works for eligible businesses

As consultation wrapped up last week, a change may be on the way as the ACCC considers introducing a class exemption for collective bargaining for selected businesses, agribusinesses and franchisees.

Collective bargaining under the ACCC

Collective bargaining is where two or more competitors come together to negotiate with a supplier or a customer over terms, conditions and prices.

This is closely related to collective boycotting, which is where competitors agree not to acquire goods or services from, or not to supply goods or services to, a business unless the business accepts the terms and conditions proposed by the group.

Gaining permission for collective bargaining

Currently, collective bargaining will only be allowed if permission has first been obtained from the ACCC. This is because there are many risks with collective bargaining that may violate Australian competition law.

Permission for collective bargaining may be gained through either a process of authorisation or notification, each inclusive of an application and lodgement fee.

Authorisation is where a business applies on behalf of a group of businesses to the ACCC for permission to engage in collective bargaining.

Notification, as an alternative process to authorisation, is where a business lodges a collective bargaining notification with the ACCC on behalf of the collective bargaining group. The ACCC will then have 14 days to object, or the collective bargaining group may proceed. For a collective boycott, the ACCC will have 60 days to object.

In both processes, permission will only be granted if the ACCC is satisfied that the likely public benefit from the collective arrangement will outweigh the likely public detriment. For example, by joining together a group of smaller businesses may have a better opportunity to negotiate terms than as individual businesses, leading to more efficient and optional outcomes.

What is the effect of proposed collective bargaining class exemption?

The proposed exemption would mean that certain businesses do not require permission for collective bargaining from the ACCC, bypassing the authorisation or notification process. The ACCC has described the exemption as a ‘safe harbour’, where eligible businesses can collectively bargain without risk of breaching the Competition and Consumer Act.

At this stage it is expected that the class exemption will be limited to smaller businesses, as determined by the number of employees and turnover of each business, and the value of the contract that the group is negotiating.

However, before the class exemption is made the ACCC must be satisfied that collective bargaining by the selected classes of business will not substantially lessen competition, and that the public benefit will outweigh any detriment of allowing the collective bargaining.

Of course, ineligible businesses or those seeking collective boycotts will still need to seek permission from the ACCC!

What happens next?

The first round of consultation ceased this week and the ACCC is in the process of reviewing submissions on the proposed exemption from relevant businesses. It is likely that a second round of public consultation about the form of the class exemption for collective bargaining will take place in the coming months.

How does this affect me?

For advice on how the proposed exemption may impact your business, please do not hesitate to contact Aitken Partners’ experienced Business Law team.

Authored by Erin Meeking (Graduate Lawyer)

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