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Proposal to give SMEs collective bargaining power

Proposal to give SMEs collective bargaining power

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A proposal has been put forward to allow small businesses, franchisees and agribusinesses the ability to negotiate collectively with customers and suppliers without breaching competition laws.

While collective bargaining is currently banned under competition law, an exemption for these smaller businesses has been proposed by the Australian Competition and Consumer Commission (ACCC) as a means of allowing them to negotiate better terms.

“Businesses can sometimes be better off negotiating with their customers or suppliers as a group. Working together, they may be able to negotiate more efficiently with larger businesses to achieve better terms and conditions than they can on their own,” ACCC deputy chair Mick Keogh said.

He acknowledge that while businesses are already able to seek “case-by-case legal protection” to bargain collectively, this is a cumbersome, expensive and time-consuming process.

“In contrast, once a collective bargaining class exemption is in place, eligible businesses would automatically get an exemption. This would allow those businesses to gain easier access to the benefits of collective bargaining and begin negotiating sooner,” he said.

“Over the years, the ACCC has considered many collective bargaining arrangements. Most come from groups of primary producers or other small businesses wanting to collectively bargain with a larger business; for example, farmers wanting to bargain with the company that buys their produce.

“This has given us a good evidence base about the types of collective bargaining that produce public benefits and are unlikely to harm competition, and are therefore likely to be suitable for this exemption.”

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In a bid to determine the viability and potential uptake of such a proposal, the ACCC has launched a discussion paper and is actively seeking feedback from business leaders through its website.

The proposal would not force parties to negotiate with a business collective if they did not wish to do so.

“It simply means that the group is able to collectively negotiate with the target on a voluntary basis without breaching the competition law,” it states.

It does point out, though, that collective bargaining exemptions can only be granted where it “would not have the effect, or would not be likely to have the effect, of substantially lessening competition; or would result in, or would be likely to result in, a benefit to the public that would outweigh any detriment”.

Of particular interest to the ACCC is determining:

  • The types of businesses that should be covered by such an exemption
  • How eligibility would be determined (such as by number of employees, business turnover or contract value)
  • Whether an exemption should be granted to dealing with suppliers or business customers, or both
  • Whether such a measure adversely affects businesses that fall outside of the eligibility requirements

Feedback on the proposal can be provided until 21 September 2018.

Proposal to give SMEs collective bargaining power
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