THE threat by the Australian Competition and Consumer Commission (ACCC) to take GM Holden to court to force it to the negotiating table in front of a mediator was in part driven by the urgency to extend the deadline for agreement to help Holden owners.

The urgency was because Holden dealers potentially would not have been in a position to legally conduct authorised service of Holden owners’ vehicles if the May 31 deadline to settle was not met and the matter went to court.

Right now Holden dealers have a standing franchise agreement which includes all the various legal arrangements and rules involved in performing Holden service and parts back-up for owners. This terminates in 2022.

Holden says (see Holden comments below) that agreement ensures that Holden owners will have service coverage until then.

But that is not strictly the case because that agreement was in danger of being made void if the parties could not get a settlement by May 31 (now June 30).

The problem is that, if the matter then moves to court, the legal processes that could take place could likely be predicated on dealer agreements having been terminated because Holden was no longer in a position to supply cars and therefore allegedly unable to meet its obligations under the agreement. The service arrangements would end with it.

The problem is that Holden had linked its compensation package with completely new service agreements that its dealers could only sign once they agreed to the compensation. GM was not prepared to sign off the new service agreements if the dealers had not settled their compensation packages.

So the position is that if Holden does not get agreement and settle on an acceptable compensation package for dealers and the matter moves on to court, then it will be faced with the existing service arrangements under the current dealer agreements no longer valid and no new service agreements signed.

In effect, if it goes to court there is no or limited service coverage depending on how many dealers take up the offer of a new service agreement.

That means Holden dealers would have to take their Holden service signs down and hand back their special tools.

According to one insider familiar with the matter: “Holden was saying that, unless the dealers settle its offer by the end of May, compensation will be withdrawn and dealers will not be offered participation in any new service agreements.

“Holden was saying to the dealers that it would not be appropriate to be making agreements with people who were suing them. They were ready to wash their hands of the current network.”

GM was clearly wanting to hold out the ongoing business opportunity to service the one million plus Holden fleet as an incentive for dealers to sign the compensation settlement.

But linking the compensation settlement with the new service agreement, and flirting with the prospect of winding up in litigation over compensation, put GM Holden in a position where it was potentially unable to meet its public undertaking to all the owners of Holdens, and especially those who bought Holdens since the announcement of its withdrawal, that its dealer network would be backing the products with warranty coverage, service and parts for 10 years.

Any reasonable person would have thought that from what Holden said at the announcement that it was safe to buy a Holden because the 185-strong Holden network was going to be looking after owners for the next 10 years.

Apart from the manner in which Holden was treating its dealers over the issue of compensation, the fact that Holden owners were within weeks of having no authorised service from the 185 dealers across the nation, was occupying the minds of the ACCC.

As it stands, the ACCC action has bought Holden owners at least another four weeks until June 30. If the matter is not settled then and the matter proceeds to court, Holden owners are once more subject to a potential failure by Holden to back up their maintenance and repairs.

In fact, GM Holden did not have any such arrangements in place for its dealers to cover Holden owners for repairs and maintenance because no dealers had settled and none have signed on as service dealers at this stage and the existing dealer agreements covering service until 2022 were in doubt.

If the matter of compensation proceeded to court, then it could have been years before it settled and the warranty and service coverage for Holden owners, with their loss of access to all the service training and repair knowledge residing with the current dealers, would become chaotic and second rate. Certainly not what Holden buyers would have expected.

Asked if the ACCC was concerned that when Holden made undertakings that Holden owners would have service and parts support for 10 years, but did so without any locked in agreements in place for that service to be carried out for the 10 years, the chairman of the ACCC, Rod Sims told GoAutoNews Premium: “We have an investigation that is still under way in terms of that issue and in terms of how they treated particular dealers. So there is certainly more that is continuing in relation to our work with Holden.

“This is a very big issue for us in terms of 185 loyal dealers who have been met with, in our view, a take-it or leave-it ultimatum which we think is extremely unsatisfactory.”

Asked if it would it be fair to say that the ACCC will be making sure that undertakings made to owners of Holdens and especially those who bought a Holden since the announcement will have their expectations for service, warranty repairs and parts will be covered, Mr Sims said: “That is certainly one issue we are looking at. You sell a car on a basis that you will provide the parts and provide the service. If that were not to happen then that would be something that would potentially be a breach of the act.

“So that is certainly an issue that is still on our radar.”

Mr Sims said that what the ACCC had done was to take the pressure off the impending deadline of the end of May and ensure ongoing service coverage for Holden owners at Holden dealerships.

He said the expectation would be that the parties would have to settle by the June 30 deadline.

“And they have to do so in a way that represents good faith negotiations. That is what we will be watching for. It cannot just be continuation of the past engagement. Take-it, or leave-it. That is how we see the past engagement.”

Referring to the service agreement deadline being linked to the deadline for settling with Holden, Mr Sims said: “That has all been pushed back (to June 30). It is all part of the same package.”

“They were offering that as a package to dealers. They had to take it or leave it but that whole package has now been pushed back (to June 30).

He said the service coverage for Holden owners by Holden dealers at this stage only goes to June 30 and no further “but there now must be good faith negotiations and there is a resolution process in place. So far, so good.

“This is not the end of it. We need to see how this process unfolds to make sure Holden meets its obligations under the dispute resolution provisions and that is what we are going to be watching for,” Mr Sims said.

Holden responded to this article and the ACCC by stating that:

• Holden has repeatedly confirmed to dealers that, if they choose to decline Holden’s offer, they may continue as authorised Holden dealers providing aftersales service and parts until their current agreement expires at the end of 2022.
• The dealers have no legal right or entitlement to a services agreement beyond 2022. Holden is offering this new longer term services agreement as part of the compensation package but it has no obligation to do so. PwC analysis has confirmed there is significant benefit attributable to this new services agreement through to December 2025 which more than offsets the losses to Holden dealers from a reduction in service and parts associated with the cessation of Holden new vehicle sales.
• This reinforces that Holden’s offer which also includes financial compensation is very fair and reasonable.  GM Holden reiterates its good faith desire to have an ongoing relationship with the dealers and for them to continue to provide profitable service, repair and parts activities.
• It is not correct that no dealers have accepted Holden’s offer.
• Holden is committed to providing Holden customers with aftersales service and parts, and will take all necessary steps to ensure that including looking at a range of alternative options where any dealer decides to relinquish its rights to continue to provide aftersales support for Holden customers.

By John Mellor