While collective bargaining by small businesses has previously not been a hindrance to competition, when competitors acted together in the past, they required some form of exemption to avoid the risk of breaching competition laws.
Exemptions had only been made available on a case-by-case basis through an ACCC notification or authorisation.
This new class exemption is the first ever made by the ACCC and will allow collective negotiation without the need for ACCC approval.
ACCC deputy chair Mick Keogh said with the ability to bargain collectively, businesses can share the time and cost of negotiating contracts and have more say when negotiating.
“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,” Mr Keogh said.
Mr Keogh said it does not require anyone to join a collective bargaining group, or require a customer, supplier or franchisor to deal with the bargaining group if they do not want to. It merely means that the group can collectively bargain with the supplier or franchisor on a voluntary basis, without worrying about a possible competition law breach.
The other party would still be free to choose to continue to negotiate with each member of the group individually.
The Australian Small Business and Family Enterprise Ombudsman, Bruce Billson, said the move considerably strengthens the position of SMEs at the negotiating table.
“Collective bargaining is a potential game-changer for small businesses, as it boosts their purchasing power and mitigates the risk of predatory tactics sometimes used by larger companies to financially squeeze their small suppliers,” Mr Billson said.
“It also saves time and money for small businesses in contract negotiations, as they can share the cost and resources.”
Small business groups can now choose to engage in collective bargaining whenever they want. They just need to provide a one-page notice to the regulator, and it involves no cost.
“In addition to the cost savings and red tape reduction, the new provisions better accommodate the dynamic pace of the small business economy by allowing participants to enter and exit the group without the need for a new approval,” Mr Billson said.
“Importantly, the arrangement — known as a class exemption — applies to businesses with an annual turnover of less than $10 million per year. It covers 98 per cent of Australian businesses.
“It’s an initiative that will help small businesses remain competitive and viable, at a time when it is needed the most.”