Small businesses exempt from competition law when collectively bargaining with suppliers

Small businesses can now collectively bargain with their suppliers over issues such as prices and conditions without first needing the consumer watchdog’s approval.

The Australian Competition and Consumer Commission’s (ACCC) class exemption kicked in last Thursday, allowing 97% of businesses to collectively negotiate with their suppliers, processors and customers without the ACCC’s authorisation.

Previously, businesses needed to apply for exemptions that were granted on a case-by-case basis through an ACCC authorisation process.

This new class exemption removes the need for most small businesses to use that process, reducing the time and cost of making negotiating contracts.

The small business ombudsman Bruce Billson said the new arrangement will significantly help small businesses to collectively negotiate with the larger companies that buy their products.

“This strengthens the position of small businesses at the negotiating table considerably,” Billson said in a statement.

“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,” he said.

Businesses with a turnover of less than $10 million in the financial year before forming a bargaining group are eligible for the class exemption.

The exemption also applies to franchisees and fuel retailers, regardless of their size, that join a bargaining group to collectively negotiate with their franchisor or fuel wholesaler.

Groups of businesses that want to use the class exemption must give a one-page notice form to the ACCC and to each business they are seeking to negotiate with. There is no fee for lodging the notice.

Once the notice is lodged, businesses will be legally protected from competition laws during negotiations with their suppliers.

Mick Keogh, ACCC deputy chair, announced the new exemption last week, saying it will help the majority of small businesses and franchisees, including groups of farmers, wanting to bargain with the companies that buy their produce.

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

Collective bargaining is a voluntary process, meaning that the class exemption does not require any business or supplier to join a bargaining group or enter into negotiations.