ACCC grants collective bargaining powers to small businesses

Small businesses, franchises and fuel retailers can now collectively bargain with suppliers or franchisors without having to seek an exemption.

Small petrol stations will be given the power to collectively bargain with fuel suppliers under new ACCC rules. Picture: NCA NewsWire/Kelly Barnes

Small businesses, franchises and fuel retailers will now be able to collectively bargain with suppliers or franchisors without having to seek an exemption from the competition regulator.

The Australian Competition and Consumer Commission made the order on Thursday in a bid to improve the power of small businesses in negotiation.

The exemption applies to businesses and independent contractors with a turnover of less than $10 million a year who form a bargaining group.

The move by the ACCC replaces the previous arrangement where small businesses that wished to negotiate collectively would have to seek authorisation on a case-by-case basis.

Businesses with a turnover greater than $10m can choose to seek authorisation from the ACCC to ensure legal protection in a collective bargaining situation.

Under the exemption small businesses and farmers would be able to negotiate collectively with suppliers and processors.

Eligible fuel retailers will also be able to negotiate collectively with fuel wholesalers.

Businesses will not be forced to collectively negotiate and can choose to negotiate individually if they so wish.

ACCC deputy chair Mick Keogh said the exemption would go to assisting many small businesses in better negotiating their positions.

“This class exemption will help the majority of small businesses and franchisees, including groups of farmers wanting to bargain with the companies who buy their produce, and small businesses wanting to jointly buy electricity,” he said.

“When they bargain collectively, businesses can share the time and cost of negotiating contracts, and have more say when negotiating.”

ACCC deputy chair Mick Keogh.

Mr Keogh said the collective bargaining exemption was not only in the interest of small business, but also the larger suppliers and franchisors they negotiated with.

“The counterparties that small business groups collectively bargain with can also benefit from time and cost savings, because they will not have to negotiate with each business individually,” he said.

Chair of the Council of Small Business Organisations of Australia Mark McKenzie welcomed the move by the ACCC.

“It strengthens the leverage of small business in dealing with suppliers and operating in the market,” he said.

“You’re at a point here where small businesses get a better cut of the pie in a way that legislation would never be able to deliver.”

But Mr McKenzie said the $10 million ceiling was a blunt instrument and could see some businesses that were high volume but low margin fall through the cracks.

“From a retail perspective when you’re taking small volume high margin it’s not going to be that effective,” he said.

“But for the vast majority of suppliers who are working off a better mix and volume this is a reasonable starting point.”

Mr McKenzie said COSBOA would have preferred the cap to be higher.

“The bigger companies would probably say they’d like to have it a bit lower,” he said.

“$10 million is a good start as long as we’re not locked into that long term and there’s the capacity to go back and revisit it in the future.”