Reading time: 4 minutes

On 8 July 2016, the Australian Competition and Consumer Commission (ACCC) published a new collective bargaining guide for small businesses and farmers. The guide works through the benefits of cooperative arrangements whereby small businesses group bargain with larger corporations or participates in joint boycotts. This article unpacks the ACCC’s collective bargaining guide for small businesses and farmers.

1. What is Collective Bargaining?

Collective bargaining in the context of this new guide is the phrase used when two or more competitors get together to negotiate price, terms and conditions with larger corporations. It will be a collective arrangement when two or more small businesses jointly enter into negotiation with a more major company, or they act together in a boycott against the larger corporation.

An example is when farmers supply fresh produce to a supermarket. The farmers might seek to enter jointly into negotiation with the supermarket. Alternatively, farmers might strive to organise a boycott of their product supplies to the supermarket’s disadvantage.

2. What are the General Rules of Collective Bargaining?

Without retaining the ACCC’s approval, the above collective arrangements may run the risk of breaching the Competition and Consumer Act 2010 (Cth) (CCA). 

Breaching the CCA can result in significant penalties against the small businesses and large corporation. This is because competitors are required to act independently in the course of their business dealings.

Any collusion in relating to pricing (i.e. “price fixing”) or other business decisions is condoned. Section 45 of the CCA prohibits contract, arrangements or understandings that are likely to “substantially lessen competition”.

3. What are the Benefits of Collective Bargaining for Small Businesses and Farmers?

In its Collective Bargaining Guide, the ACCC lists the benefits collective bargaining has for small businesses and farmers as well as larger corporations.

Benefits for the Small Business

The benefits for small businesses acting together are varied. It can:

  • reduce the time and cost of putting supply arrangements in place;
  • increase the opportunity to negotiate terms to reflect the group’s needs – thereby providing the smaller businesses with a more even playing field;
  • increase the quality of information (i.e. businesses can share information and gather costs to engage professional counsel);
  • open new market opportunities in that the collective group might be viewed as a more attractive investment; and
  • streamline and coordinate supply chain efficiencies (i.e. ordering and delivery capabilities)

Benefits for the Large Corporation

The benefits for giant corporations can include:

  • reducing costs involved with negotiating separately;
  • increasing certainty and boosting orders; and
  • increasing efficiency in receiving information from small businesses.

Benefits of Collective Boycotting

In some situations, the ACCC recognises the benefit in collectively boycotting. It may be beneficial, for example, when it is necessary to achieve the productivities associated with collective bargaining.

4. When will the ACCC Authorise Anticompetitive Behaviour?

In certain circumstances, collective arrangements may be in the public’s interests. It will be in the public’s interest where the group has cooperative objectives and requirements.

Section 88 of the CCA gives the ACCC power to exempt businesses from seemingly anticompetitive behaviour when it is actually for the public’s benefit. Section 90 of the CCA sets out the procedure for granting such an exemption.

Striking a balance between what is considered competitive or not can be tricky. From its experience, the ACCC understands that collective bargaining for small businesses is important. Generally, the public’s benefit will outweigh any detriment. Accordingly, the ACCC has confirmed that most collective arrangements have been approved whereby participation is voluntary between the small and large corporations. While this might be so, each case is assessed on its merits.

5. How Do You Gain the ACCC’s Approval?

There are two ways to gain the ACCC’s approval. These are by:

  1. Lodging a “notification” to the ACCC: This process is used when all bargaining members are upfront and unlikely to change over time and there is one large corporation the small businesses intends to deal with; and
  2. Applying for “authorization” to the ACCC: This process is usually longer than notification. However, it is more flexible in that it can suit arrangements where there are groups that come and go, or there is a breadth of stakeholders the small business intend to deal with.

Both of these processes include a public consultation. The applications and submissions are then placed on the ACCC’s public register.

Key Takeaways

In working together, small businesses and farmers are seen to have equal footing against the bigger businesses they seek to make arrangements with. The ACCC believes that when small businesses act jointly, they are in a better position to negotiate terms and conditions with larger businesses than they could achieve on their own. Contact LegalVision’s lawyers to assist you with any questions you may have. Call us on 1300 544 755.

Webinars

How to Protect and Enforce Your Trade Mark

Wednesday 11 May | 11:00 - 11:45am

Online
Protect your business’ brand from copycats and competitors. Register for this free webinar to learn how.
Register Now

Corporate Governance 101: Responsibilities for New Directors

Friday 13 May | 11:00 - 11:45am

Online
If you are a new company director, join our free webinar to understand your legal compliance obligations. Register today.
Register Now

How Franchisors Can Avoid Misleading and Deceptive Conduct

Wednesday 18 May | 11:00 - 11:45am

Online
Ensure your franchise is not accused of misleading and deceptive conduct. Register for our free webinar today.
Register Now

New Kid on the Blockchain: Understanding the Proposed Laws for Crypto, NFT and Blockchain Projects

Wednesday 25 May | 10:00 - 10:45am

Online
If you operate in the crypto space, ensure you understand the Federal Government’s proposed licensing and regulation changes. Register today for our free webinar.
Register Now

How to Expand Your Business Into a Franchise

Thursday 26 May | 11:00 - 11:45am

Online
Drive rapid growth in your business by turning it into a franchise. To learn how, join our free webinar. Register today.
Register Now

Day in Court: What Happens When Your Business Goes to Court

Thursday 2 June | 11:00 - 11:45am

Online
If your business is going to court, then you need to understand the process. Our free webinar will explain.
Register Now

How to Manage a Construction Dispute

Thursday 9 June | 11:00 - 11:45am

Online
Protect your construction firm from disputes. To understand how, join our free webinar.
Register Now

Startup Financing: Venture Debt 101

Thursday 23 June | 11:00 - 11:45am

Online
Learn how venture debt can help take your startup to the next level. Register for our free webinar today.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer