Mercedes-Benz Australia plans to swing its dealers over to become agents at the start of the New Year.

But it is difficult to see how Mercedes-Benz can proceed with the controversial agency model when more than 80 per cent of its retailers are suing the company over the issue and the parties are going to be in court in February only a month after they are supposed to be selling cars owned by Mercedes-Benz.

Mercedes-Benz would also be proceeding with a model that the dealers have stated they only agreed to because they were presented with a choice of becoming an agent or closing businesses worth millions of dollars.

The Federal Court, in a hearing on Thursday, agreed with the dealers that resolution of the issue was urgent and fast-tracked the first hearing dates.

A trial date has now been scheduled for August next year with the matter to return before Justice Beach in February 2022.

There are now suggestions that the dealers will argue that the early dates set for hearing the matter provide compelling reasons for the start date of the agency model to be deferred, at least until the conclusion of the trial in August, assuming Mercedes-Benz is allowed to continue with the agency model at the conclusion of the case.

According to those close to the dispute, the case is a critical test of Australia’s Franchising Code of Conduct and Australian Consumer Law with far reaching implications for every franchise business in Australia. 

Speaking on behalf of the dealers, James Voortman, CEO of the Australian Automotive Dealers Association, said: “We are delighted the Federal Court agrees with us that the issues in our case are urgent and deserve to be heard as soon as possible. 

“We can now take the fight up to Mercedes-Benz without delay to seek justice on behalf of the Australian industry.

“Despite strenuous efforts by Mercedes-Benz to delay the start of proceedings, we are pleased to have a trial date for next year and for a process that will see us back in court in February at the latest.

“This is a watershed issue for Australian consumers and the entire Australian franchise industry. If Mercedes is successful in forcing these changes on the industry, history shows competition will go down and car prices will go up.

“Every franchise owner will be watching this case closely because if the Colossus Mercedes-Benz can appropriate the goodwill of Australian car dealers without compensation, any franchisee could be at risk of the same threat.

“Fundamentally, franchisees are the back-bone of Australian small business. Most are family businesses who have built up the value in their business through sheer hard work and created real value for themselves and their local communities. 

“If Mercedes creates a precedent, where that value can be captured for its own benefit without compensating franchisees, then any franchisor will be able to do the same.

The Australian dealer group is advised by a high-powered legal team led by Mr Tim Castle SC and leading automotive industry lawyer Evan Stents at HWL Ebsworth.

Meanwhile, Mercedes-Benz has issued the following statement:

“Mercedes-Benz Australia is pleased with today’s outcome and it has always been our position that this matter should be determined by the Court as quickly as possible.

“We look forward to the launch of the Mercedes-Benz agency model, which will better meet the demands of modern Australian consumers.”

By John Mellor