Update – Code of Conduct for the Motor Dealer industry

Last year was a good year for the motor dealer industry, seeing bipartisan support from Canberra for a specific Automotive Dealer Code of Conduct (Code).

As a refresher, the Code seeks to address the power imbalance in the relationship between franchisees, franchisors and car makers and provides a means for the parties to settle disputes fairly.

The Coalition and ALP both agree that to bring motor dealers within the ambit of regulations which apply to other smaller-scale franchises would fail to comprehend the size and complexity of dealership operations. In support of the Code just prior to Christmas, the Coalition government designated funding to pay for the development of the Code, and the ALP included a specific code as part of its policy in the event it wins government.

According to the AADA, the government has committed resources for the development of the Code in the 2018-19 Mid-Year Economic and Fiscal Outlook. In December last year, the government also released a Regulation Impact Statement outlining a number of issues and potential options for reform and invited submissions from interested parties.

Major industry stakeholders support the introduction of Code, including the AADA, Franchise Council of Australia, Motor Trades Association of Australia, Australian Automotive Aftermarket Association and Australian Automobile Association.

Closely related to the matter, ACCC announced a proposal in October last year for a class exemption allowing all franchisees to collectively bargain with their franchisor regardless of their size or other characteristics without prior authorisation from the ACCC.

In light of these recent developments motor dealers can be confident that the process to introduce the Code has well and truly kicked off.

You can provide feedback on the Regulation Impact Statement outlining any concerns you have about the relationships between franchisees and car manufacturers. For more information click here.  Submissions close February 13.

This article was written by Dan Perara, Lawyer, Commercial.