Mixed industry reaction to extended unfair trading practice protections

There has been a mixed industry reaction to the Albanese Government announcement regarding the extension of unfair trading protections to small businesses.

The Motor Trades Association of Australia (MTAA) says the government’s commitment to levelling the playing field offers additional safeguards for small businesses that frequently struggle against unilateral changes to supply terms, restrictive contracts, and unfair market pressures. 

These new protections will help to create a fairer, more equitable business environment for all stakeholders in the industry.

This is a positive step, particularly for franchise automotive businesses, including dealers and repairers, who face unique challenges within the franchising system, however there is further work ahead. 

“We support any efforts to create a fairer playing field for small businesses in their interactions with large corporates,” MTAA chief executive Matt Hobbs says

We remain committed to working closely with the government to develop solutions that protect automotive dealers, ensuring they are treated fairly when dealing with multinational car companies that make key decisions offshore, especially as the global industry undergoes its most significant transformation in a century,” he sayts

Businesses in the automotive industry frequently face similar challenges to consumers when dealing with unfair trading practices, such as imbalances in supply chain relationships and sudden, unilateral changes to contract terms. Many of these fall outside the scope of the recent Unfair Contract Terms regime, highlighting the need for stronger and broader protections.

A key example of this imbalance is the relationship between insurers and collision repair businesses, where insurers often exert unfair pressure on repairers regarding pricing, turnaround times, repair methods, and part selection. 

To address this, the Motor Vehicle Insurance and Repair Industry Code of Conduct is currently being updated to rebalance these relationships. The MTAA is also calling for the Code to be made mandatory.

AADA: Determine the thresholds

The Australian Automotive Dealer Association (AADA) is calling on the government to determine the thresholds for small business qualification.

“Extending these protections to small businesses is in line with numerous submissions put forward by the AADA over recent years, and we welcome the continued engagement with the Federal Government,” AADA chief executive James Voortman says.

“While we support the intent behind these reforms, it is essential that the threshold for small business covers all franchisees, including franchised new car and truck dealers. Dealers continue to be subjected to unfair practices at the hands of large multinational vehicle manufacturers.

“Recent Federal Court appeals have demonstrated how multinational manufacturers leverage existing power imbalances to their advantage, often at the expense of Australian businesses. These practices undermine fair competition and place undue strain on locally operated dealerships, which play a crucial role in the Australian automotive industry and the broader economy.

“AADA looks forward to engaging with the Government to determine the thresholds for small business qualification and to ensure that all businesses facing unfair practices, including new car dealers, are afforded appropriate protections,” he says

AADA calls on both sides of Parliament to immediately address this power imbalance in response to what is the most significant transition the automotive industry has seen for some time. Fair and equitable protections must be implemented to support Australian businesses navigating these changes.