New collecti

Beginning earlier this month, small businesses and franchisees (along with fuel retailers) can use the ACCC’s class exemption for collective bargaining. What does this mean for your small beauty business or sole proprietorship? You can now collectively negotiate with suppliers – like your card processor – and franchisors without having to go to the ACCC for individual approval first, which was previously required.

Who is this for?

Because this class exemption applies to businesses and independent contractors who each had turnover of less than $10 million in the financial year before a bargaining group was formed, it covers more than 98 per cent of Australian businesses says the Australian Small Business and Family Enterprise Ombudsman.

How does it work?

With the new rules, small businesses and franchisees can collectively negotiate and bargain with suppliers and franchisors, which means you can band together with other small businesses or franchisees as a single unit instead of each individually trying to negotiate with them in a David and Goliath-type situation. “This class exemption will help the majority of small businesses and franchisees, including groups of farmers wanting to bargain with the companies who buy their produce, and small businesses wanting to jointly buy electricity,” ACCC Deputy Chair Mick Keogh said. “When they bargain collectively, businesses can share the time and cost of negotiating contracts, and have more say when negotiating.” Keogh says it acts as a cost savings for the small businesses and suppliers and franchisors who don’t have to spend on individual negotiations anymore.

But will it hurt competition?

The The ASBFEO says no and that this simply streamlines the process for small businesses who often don’t have the time, expertise or money to navigate this process alone. “While collective bargaining by small businesses does not generally harm competition, when competitors act together they require some form of exemption to avoid the risk of breaching competition laws…. This new class exemption removes the need for most small businesses to use those processes. The class exemption process is quicker and easier and allows eligible groups to obtain protection from competition law for bargaining free of charge, simply by providing a one-page notice to the ACCC.” 

Is it a mandatory process?

This is a new voluntary process to help small businesses avoid being in breach of competition law, so no one is required to joining a collective bargaining group. And suppliers and franchisors are still permitted to negotiate one-on-one if they prefer rather than engaging with a bargaining group.

If your business is too large isn’t of the correct business-entity type to utilise the new collective bargaining class exemption, they you are still able to use the “ACCC authorisation and notificaiton process to seek legal protection to collectively bargain on a case-by-case basis,” says the ASBFEO.

More information about the class exemption can be found at Collective bargaining class exemption

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