Individual Honda Australia employees face potential fines of up to $500,000 per offence.

The Australian Competition and Consumer Corporation (ACCC) has filed proceedings in the federal court in Victoria alleging Honda Australia engaged in misleading the customers of two former Honda dealerships.

The dealerships are Brighton Automotive Holdings Pty Ltd (Astoria) in Victoria and Tynan Motors Pty Ltd (Tynan) in NSW.

It is the fourth in a series of recent court actions against Honda Australia following its move to an agency model. 

The first was an application by some Honda dealers, including Astoria and Tynan, seeking a declaration that Honda had repudiated their dealer agreements by giving notice of termination before their expiry date.  

This was followed by a pre-action discovery application by Astoria and Tynan seeking disclosure from Honda of documents relating to the timing of the decision to implement an agency model.

A further proceeding was then commenced by Astoria and Tynan arising out of Honda’s conduct that is now also the subject of the ACCC proceeding. 

Astoria and Tynan then commenced a further proceeding against Honda in the Supreme Court of Victoria seeking damages for early termination of their five-year dealer agreements after just two years. (Honda “plotted” sacking plan). All of the proceedings, apart from the ACCC proceeding, have been prosecuted by HWL Ebsworth.

The ACCC latest documents lodged indicate the proceedings arose when Honda changed from a franchise operation to an agency model. During this change, it reduced the number of owners and the number of Honda retail outlets.

The ACCC alleges that Honda, in communications with the customers of the two dealerships between January 2021 and June 2021, falsely said the dealerships were closed and were not servicing Honda vehicles and then directed those customers to other dealerships.

The ACCC said that the franchise agreements with Astoria and Tynan had been terminated after Honda’s restructure but both of these businesses were continuing to trade independently and were continuing to service vehicles, including Hondas.

ACCC commissioner Liza Carver said: “While Astoria and Tynan were no longer a Honda franchisee, they remained open as independent dealerships and were able to service Honda vehicles.”

The ACCC alleges that in emails, text messages and phone conversations, Honda informed Astoria and Tynan customers that these businesses had closed and directed customers to contact a Honda dealership or Honda Service Centre to book their next service.

“We allege Honda deprived customers of the opportunity to make an informed choice about options for servicing their car in favour of a Honda-linked dealership which may have been less convenient or more costly for them,” Ms Carver said.

“We also allege Honda caused harm to the Astoria and Tynan businesses, by falsely claiming they had closed or would close, which may have led customers to have their Honda vehicles serviced elsewhere.”

“It is important that independent dealerships can service vehicles of all brands, and from July 1 dealerships will have fair access to the necessary technical information from all manufacturers to service and repair all makes of cars.”

The ACCC is seeking declarations, pecuniary penalties and costs. Its website states that under the Australian Consumer Law. corporations may be fined up to $10 million per offence for offences relating to “making false or misleading representations” and $500,000 fine per offence for each individual breach of the Act. 

As reported by GoAutoNews Premium in March last year (Honda carpet bombs ex-dealers), Astoria stated that Honda Australia had been using dealers’ own databases to send SMS and email messages to the customers of those dealers left out of the agency model, telling those customers to move their business away to other remaining Honda dealers.

The owners of Astoria Brighton, in Melbourne’s south, Mark Avis and Ron Klein, told GoAutoNews Premium that the emails and SMSs using Astoria’s own customer database gave the impression that Astoria had gone out of business and then directed the customer to other dealers.

The emails told the customer that Honda Australia had their service details and would contact them before their next service and direct them to their nearest Honda dealer.

In March this year, GoAutoNews Premium also reported that a claim filed in the Supreme by Astoria and Tynan and a related entity – showed that Honda was internally considering the termination of a significant number of its authorised Honda dealers without disclosing this information to those dealers when renewing their dealer agreements in 2018.  

This was before Honda Australia announced in May 2019 that it would restructure its business model, moving from a franchised model to an agency model.

It terminated 36 of its authorised dealerships’ franchise agreements on June 30, 2021. This included Astoria and Tynan who exited in January 2021.

The ACCC background said Astoria is located in Brighton and Bentleigh East, Melbourne, and has been a Honda-branded dealership for about 50 years. Tynan, in Sutherland, NSW, had also been with Honda for around 50 years.

The ACCC also pointed out that the Motor Vehicle Service and Repair Information Sharing Scheme, which passed parliament last year, is scheduled to come into effect on July 1, 2022. 

This requires vehicle service and repair information to be made available for purchase by Australian repairers at a fair market price.

Statement from Honda: 

Honda Australia has cooperated with the ACCC’s investigation into this matter. We are reviewing the recent filing by the ACCC and at this stage are unable to comment further on specific circumstances or details regarding the claims made or individual dealers.

By Neil Dowling