General Motors Holden Australia NSC Pty Ltd (Holden) has committed to negotiate with its dealers in good faith about compensation for Holden’s withdrawal from the Australian market, as required under the Franchising Code of Conduct and Australian Consumer Law.
The commitment follows pressure from the ACCC for Holden to agree to extend the deadline for acceptance of its compensation offer and to engage in good faith negotiations with dealers.
The ACCC said it was preparing for court action had Holden not changed its position.
The ACCC had received complaints that Holden was placing undue pressure on dealers by imposing an unnecessary deadline for acceptance of the proposed compensation package. This meant that dealers would have been forced to choose whether to accept the compensation offer before completing a dispute resolution process.
The ACCC was concerned that this conduct may raise concerns under the good faith obligations of the Franchising Code of Conduct and the unconscionable conduct provisions of the Australian Consumer Law.
“As franchisees, the dealers have less bargaining power than Holden. Holden was putting pressure on dealers to accept the compensation package by 31 May without giving a proper opportunity to negotiate and engage in a dispute resolution process. We believe this deadline was unnecessary and also unfair,” ACCC Chair Rod Sims said.
Holden has proposed a transition package including compensation for the withdrawal of new vehicle sales, partial reimbursement for capital expenditure and a Holden Service Operations Agreement. Holden’s commitments do not cover the amount of compensation to be offered to dealers, but relates to a negotiation process in good faith.
“We expect Holden to negotiate fairly with dealers who have represented the Holden brand in Australia for decades. We will continue to closely monitor Holden’s commitment to engage in good faith negotiations,” Mr Sims said.
Holden also committed to meeting its obligations more generally under the Code and the Dealer Agreement Dispute Resolution provisions.
The ACCC will continue its broader investigation into Holden’s engagement with dealers in relation to its withdrawal from Australia.
Background
General Motors Holden Australia NSC Pty Ltd is ultimately owned by General Motors Company, a company incorporated in and operating in the United States of America.
On 17 February 2020, Holden announced publicly that it would be retiring the Holden brand in Australia.
Holden’s withdrawal means it will not renew its existing current dealership agreements with the 185 Holden dealers in Australia.
