The Morrison Government will protect Australia’s family-owned automotive businesses and their employees from the growing power imbalance with multi-national car companies by introducing new significant financial penalties for wrongdoing under the Franchising Code of Conduct.
A fine of up to $10 million could be given to international car companies that undertake systemic breaches under the Code, including unilaterally changing contracts, poor compensation and reneging on warranties.
The existing voluntary automotive principles will be made compulsory and a new mandatory automotive code will be strongly considered, following consultation.
The Government will also explore mandatory binding arbitration provisions within this new code, similar to those in the Media Bargaining Code, which were developed to curtail the power of the Big Tech platforms.
Prime Minister Scott Morrison said Australia’s automotive dealers employed more than 60,000 Australians, including 4,000 apprentices, and contributes more than $12 billion to the economy.
“We stand up for Australian jobs and Australian businesses,” the Prime Minister said.
“We stood up to Big Tech companies and we will stand up to multi-national car companies who are riding roughshod over many family-owned Australia car dealers.”
“By protecting these businesses, we will be protecting the thousands of jobs that rely on the sector, including many apprentices.
“Car sales are surging and it’s further proof that the Australian economy is on the comeback. We need to ensure Australian family-owned automotive businesses continue to reap the rewards of this growth and the support from our supercharged instant asset write-off.”
The new measures announced today will:
- Increase available penalties under the Franchising Code to up to $10 million. This will strengthen penalties for wilful, egregious and systemic breaches of the Franchising Code by large and profitable multinational companies.
- Establish best practice by transforming existing voluntary principles into mandatory obligations under the Franchising Code. This will address concerns multi-national manufacturers won’t follow voluntary principles.
- Ensure that the Franchising Code keeps pace with changes to business practice by explicitly recognising that dealers operating as a manufacturer’s agent in relation to new vehicle sales are still protected by the Franchising Code.
Minister Cash said, “This is a decisive suite of reforms for automotive dealerships and the many local businesses, apprentices, charities and broader communities that they in turn support.
“The Government is fully committed to enacting reforms that are impactful and deliver for the nation and regions where transport is integral for economic and social needs.”
“This is a landmark set of reforms for the automotive industry, building on the critical work done by the Government, most recently with the announcement of the automotive principles to deliver for consumers in December 2020.
“I am looking forward to working together with the industry to ensure the reforms made will better the overall experience of consumers, who ultimately drive the demand that underpins the viability of the automotive sector.”
In addition, the Government is committed to working further with the automotive franchising sector and will consult on:
- Ensuring appropriate protections for automotive dealerships from unfair contract terms in their agreements with manufacturers;
- Options to achieve mandatory binding arbitration for automotive franchisees, to address power imbalance when there is a dispute; and
- The merits of a standalone automotive franchising code.