Fresh from winning its spats with the likes of Facebook and Google around paying for online news content, the Australian Government has now set its sights on taming what it believes may be the excesses of the global automotive giants.
Prime Minister Scott Morrison has announced that Government will protect Australia’s family-owned automotive dealer businesses and their employees from the growing power imbalance with multinational car companies by introducing 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.
Voluntary principles will be made compulsory
The existing voluntary automotive principles will be made compulsory and a new mandatory automotive code will be strongly considered, following consultation.
According to a media statement, the Government will also explore mandatory binding arbitration provisions within this new code, like those in the Media Bargaining Code, which were developed to curtail the power of the Big Tech platforms.
Morrison said the country’s automotive dealers employed more than 60,000 Australians, including 4,000 apprentices, and contributed more than $12-billion to the economy.
Multinationals are riding roughshod, says PM
“We stand up for Australian jobs and Australian businesses,” the Prime Minister stated. “We stood up to Big Tech companies and we will stand up to multinational car companies who are riding roughshod over many family-owned Australian car dealers.
“By protecting these businesses, we will be protecting the thousands of jobs that rely on the sector, including many apprentices.
Among the concerns being addressed are that automotive dealerships need greater protection from unfair contract terms in their agreements with manufacturers, and that there should be mandatory binding arbitration for automotive franchisees to address the power imbalance when there is a dispute.
Morrison said car sales are surging and Australian automotive dealers should continue to reap the rewards of this growth.
New increased penalties of up to $10-million
The new measures include increased penalties under the Franchising Code of 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.
There will also be measures to 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.
Additionally, the Government will establish best practice by transforming existing voluntary principles into mandatory obligations under the Franchising Code. This will address concerns that multinational manufacturers won’t follow voluntary principles.