ACCC’s new class exemption for collective bargaining

By Gabrielle Stannus

The Australian Competition and Consumer Commission (ACCC) has introduced a new collective bargaining ‘class exemption’ to protect smaller businesses from the harmful effects of bargaining power imbalances in supply chains. This new class exemption allows eligible small business to collectively bargain without breaching competition laws and industry groups to negotiate on their behalf.

In late 2020, Greenlife Industry Australia (GIA) made a submission to the ACCC inquiry into perishable agricultural goods following consultation with State Nursery & Garden (NGI) Associations, GIA members and other industry participants. GIA made the submission on behalf of the greenlife and nursery sector supply chains, given the perishability of plants and nursery stock. The submission provided details on the bargaining power of suppliers and buyers across the greenlife supply chains.

The perishable agricultural goods (PAG) inquiry examined trading practices throughout supply chains, including the relationships between growers and retailers, and the extent to which any potential bargaining power imbalances in these relationships adversely impact the efficient operation of these markets. As a result of that inquiry, the Federal Government introduced a new class exemption for small business collective bargaining into legislation on 3 June 2021.

This class exemption provides an exemption from competition law for small businesses to collectively bargain with customers or suppliers, without them having to apply to the ACCC. The ACCC says that it can be advantageous for small businesses in PAG industries to use collective bargaining as a means of negotiating better terms and conditions with larger businesses than they would otherwise achieve on their own. This change will benefit the greenlife industry as the perishability of greenlife products can place producers at a significant disadvantage to sellers in the negotiation process.

What is collective bargaining?

The ACCC defines collective bargaining as occurring when two or more competitors come together as a group to negotiate with a supplier or customer (known as the target business) about terms, conditions and /or prices. The class exemption removes the risk that collective bargaining by eligible businesses will breach the competition law.

The class exemption allows:

businesses with an aggregated turnover of less than $10 million in the financial year prior to them forming or joining a bargaining group 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.

The collective bargaining group must first lodge a one-page notice with the ACCC and with each target business it proposes to collectively bargain with (when they first approach that target). There is no fee for lodging the notice. This form can be found on the ACCC website.

NB. The class exemption does not oblige target businesses to negotiate with a bargaining group. Nor does it override any existing legal or contractual obligations between the parties, such as confidentiality clauses.

Support from industry associations

Under this new class exemption, a group of businesses may appoint a representative to act on their behalf in negotiations. Collective bargaining groups formed under the class exemption can appoint a person who is not a member of the group, such as an industry association, cooperative or professional advisor, to negotiate on their behalf. Bargaining representatives appointed by the group do not need to meet the eligibility criteria unless they are themselves also a member of the bargaining group.

An ACCC spokesperson says this means that businesses who are GIA members (or members of GIA’s other state-based associations), and who are eligible to rely on the class exemption, could choose to either form one or more collective bargaining groups and represent themselves in negotiations; or could choose to have GIA (or one of its state-based associations) represent them in negotiations. If an industry association acts as a representative, it can prepare the class exemption ‘notice form’ and provide it to the ACCC and to any target(s) on behalf of the group.

If you require any assistance to understand and/or to enter a collective bargaining agreement, please contact Peter Vaughan, GIA Chief Executive Officer at ceo@greenlifeindustry.com.au.

Further reading /contacts

Collective bargaining class exemption guidelines (June 2021)
Perishable agricultural goods inquiry report
For more information about the ACCC class exemption in general, please contact the General Manager, Competition Exemptions, ACCC at exemptions@accc.gov.au.