THE corporate watchdog’s merger notification regime, which affects the purchase and sale of dealership businesses, is already impacting on dealers seeking to exit at a time when the vehicle sales market is struggling, according to the Australian Automotive Dealer Association (AADA).

The new regime forces businesses to make public the commencement of negotiations for sales and, if the regulator chooses to get involved in the sale, the fees charged by the ACCC can be more than a million dollars.

The new mandatory ACCC Merger Notification Regime, effective January 1, 2026, will capture most franchised dealership transactions.

This week, AADA CEO James Voortman reiterated his association’s pledge to support dealerships.

In an exclusive interview, he told GoAutoNews Premium that some AADA member dealers have said the regime has made them reconsider going through a business sale or acquisition when it is made public.

“It definitely is affecting whether they go ahead with the decision to sell a business or to buy a business, which we don’t think is a good thing,” he said.

“We think the way it has operated for all those years before, some of the huge transactions that were being done by some of the bigger parties that did elicit competition concerns, were adequately covered in the past. 

“So the new regime is definitely making both buyers and sellers look at it as being very difficult.”

He said the regime has also been enforced at a time when many dealers are struggling.

“Given this environment – when even legacy brands are finding it difficult and this is impacting on dealership viability – there are some dealers who feel like this is probably the time for them to try and exit the industry,” he added.

“The worrying thing about the mergers and acquisition regime is probably it being enforced in the time when some of the smaller to medium dealers need the ability to exit the industry.

“The government has put up measures which are going to frustrate that ability.”

Now dealers will have to wait.

Mr Voortman said that the first real opportunity for change for the regime will be next year.

James Voortman

“That’s when they (ACCC) review the threshold turnovers – which by no means are relatable to the profit dealers make – and until that time, all we can do is try and give them a better understanding of how the franchised automotive sector has certain characteristics that makes it different from other businesses,” he noted.

“The automotive retail sector is the most competitive industry in Australia. It faces huge challenges with decarbonisation and with the rise of China.

“We’re going through some exceptional circumstances, and I think the worst thing we can do at the moment is to stand in the way of more rationalisation.”

A report by BDO Australia titled ACCC Merger Control Regime in June this year, spells out the pros and cons on the broadening powers of the ACCC over the sale of a dealership. 

This has been brought to the fore more recently when the ACCC initially knocked back Peter Warren Automotive Holdings’ proposed purchase of Wakeling Automotive.

The ACCC has recently approved the purchase, subject to Peter Warren selling eight dealerships (divesting its Kia, GMSV, Ram, Isuzu Ute, GAC, VW and Suzuki sites in Campbelltown and Smeaton Grange).

The BDO report, which was commissioned by the (AADA), said the new reporting regime would impose substantial costs on both dealerships and the ACCC which administers the rules.

In releasing the report, the AADA in June said that the merger notification regime would adversely affect many franchised dealership transactions.

It then lodged a submission with the Treasury, based on the BDO report, outlining the significant disadvantages for dealerships, with little corresponding regulatory benefit.

The BDO report said the regime was likely to capture a much bigger audience than just the major dealership groups.

“Given the high-turnover, low-margin structure of automotive retail, even small and regional family-owned dealers are likely to exceed notification thresholds — not because the combined business would yield market power, but because vehicle prices are high and volumes are sufficient to generate substantial gross  revenue,” said the report.

“This report demonstrates that dealership acquisitions are driven predominantly by  succession, viability and continuity imperatives, and that the regime risks imposing  disproportionate regulatory costs and delays on transactions that pose negligible competitive  risk, in turn consuming a disproportionate amount of ACCC resources.” 

At the recent AADA convention, Mr Voortman told the audience that the government was proposing changes to laws, including the code of conduct and unfair contract term provisions. 

These were among the more urgent issues brought to the government to assist dealers.

The AADA cited the merger notification regime that has been quickly adopted by the ACCC while issues relating to unfair contracts have yet to be finalised.“Every one of the transactions in our industry is going to be captured due to the new thresholds,” said Mr Voortman at the conference. 

“We believe this is probably the most competitive industry in the Australian economy, and for every one of those acquisitions to be captured during a period in which rationalisation is essential to the survival of so many businesses, we think there’s a better solution, and we’ll be we’ll be having more to say on that in the coming months.”

Mr Voortman this week told GoAutoNews Premium that the AADA had been in conversation with the government before the regime was started on January 1 this year “and we warned them at that time about the consequences”.

He said the conversation is ongoing while the AADA “has been developing research and commissioning reports, and trying to explain to them (government) how our industry works, how competitive our industry is”.

“The next potential moment for change is next year when they review the thresholds of this policy,” he said.

“That’s what we are working towards. We will continue to try and educate the regulator and the government, but we’re also conscious that the biggest opportunity for a change in this policy is probably going to be next year when the statutory review of the legislation occurs.”