GM had told dealers that if they did not accept the terms of its compensation offer to dealers by the end of May, then the offer would be withdrawn.
But the ACCC intervened.
The regulator has announced that Holden has now committed to negotiate with its dealers in good faith about compensation for Holden’s withdrawal from the Australian market, as required under the Franchising Code of Conduct and Australian Consumer Law.
GoAutoNews Premium understands that this will involve the appointment of a mediator and for Holden to allow a third party to get involved is a very big win for the dealers. Typically a mediator would be a retired senior judge and in this case the appointment might go as far up the chain as a former High Court judge.
The commitment from GM Holden follows pressure from the ACCC for Holden to agree to extend the deadline for acceptance of its compensation offer and to engage in good faith negotiations with dealers.
The ACCC said it was preparing for court action had Holden not changed its position.
The chairman of the ACCC, Rod Sims, said in an interview with GoAutoNews Premium: “We would have gone to court today had this not got sorted out. So getting it sorted out in the way it now has been with the commitment we now have from Holden; had they not given that we would have taken them to court. We would have instituted proceedings today.
“It would have injuncted Holden from enforcing the May 31 deadline.”
Mr Sims said that Holden has now committed to a disputes resolution process.
“In our view Holden was not negotiating in good faith. We were also alleging unconscionability in terms of the way they were going about the process.
“So this means that we will be watching that they negotiate fairly and our role is to make sure there are good faith negotiations. We cannot guarantee an outcome but we can make sure that there are good faith negotiations,” Mr Sims said..
The ACCC had received complaints that Holden was placing undue pressure on dealers by imposing an unnecessary deadline for acceptance of the proposed compensation package. This meant that dealers would have been forced to choose whether to accept the compensation offer before completing a dispute resolution process.
The ACCC was concerned that this conduct may raise concerns under the good faith obligations of the Franchising Code of Conduct and the unconscionable conduct provisions of the Australian Consumer Law.
Separately Mr Sims, said in a statement:.“As franchisees, the dealers have less bargaining power than Holden.
“Holden was putting pressure on dealers to accept the compensation package by May 31 without giving a proper opportunity to negotiate and engage in a dispute resolution process. We believe this deadline was unnecessary and also unfair,”
Holden has proposed a transition package including compensation for the withdrawal of new vehicle sales, partial reimbursement for capital expenditure and a Holden Service Operations Agreement.
Holden’s commitments do not cover the amount of compensation to be offered to dealers, but relates to a negotiation process in good faith.
“We expect Holden to negotiate fairly with dealers who have represented the Holden brand in Australia for decades. We will continue to closely monitor Holden’s commitment to engage in good faith negotiations,” Mr Sims said.
Holden also committed to meeting its obligations more generally under the Code and the Dealer Agreement Dispute Resolution provisions.
The ACCC said it will continue its broader investigation into Holden’s engagement with dealers in relation to its withdrawal from Australia.
An observer close to the matter told GoAutoNews Premium: “This is really a huge concession from Holden. They were not going to budge.
“The dealers had asked for a dispute resolution in front of a mediator under a disputes resolution process but Holden said they did not think there was a dispute. They wanted the dealers to outline why they thought there was a dispute. They were just stone-walling.
“My understanding is that the dealers are wanting a mediator from the top levels of the legal profession. Holden is going to find it hard not to act in good faith in front of such a person.”
Meanwhile, the Australian Holden Dealer Council has released a statement saying: “We are pleased that GM Holden has agreed to participate in good faith to the mediation process instigated by Holden dealers.
“We view this as a step in the right direction as Holden dealers continue to seek fair and reasonable compensation that reflects our long-term relationship, and financial commitment, to Holden.
“We look forward to reaching a mutually acceptable resolution with GM Holden,” the statement said.
See online: Reaction to ACCC announcement.
- GM Holden
- Federal government
- Australian Automotive Dealers Association
By John Mellor
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