ACCC finds more time for Holden dealers to negotiate fair compensation packages.
The Australian Competition and Consumer Commission (ACCC) says it successfully applied pressure on General Motors Holden for it to extend the deadline set on dealers to negotiate compensation before the brand’s exit.
GM announced Holden’s shock departure from Australia in February this year and set a deadline for dealers to accept its compensation package at the end of May this year. This deadline has now been extended to June 31, which the ACCC says complies with requirements under the Franchising Code of Conduct and Australian Consumer Law.
The ACCC says that Holden was unfairly pressuring dealers, who had no idea of the closure until GM’s announcement in February, to accept the compensation it put on the table. ACCC Chair Rod Sims said in a media statement that the deadline set was unnecessary and that the ACCC is closely monitoring Holden’s actions.
“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,” he said.
“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,” Sims added.
At the same time, Holden made an announcement confirming that it would extend the deadline originally set on the ‘current offer’ and that it would assist in finding a resolution with dealers that feel disenfranchised.
“The company will extend until 30 June 2020 the date by which dealers can accept the current offer from Holden,” says the Lion Brand in its press release.
“Separately, GM Holden will participate in a dispute resolution process to assist in resolving discussions the company has been having with dealers since February.”
Holden’s package to dealers includes monetary compensation for the withdrawal of vehicle sales and reimbursement for capital losses, with some Holden dealers having spent considerably on showroom upgrades just prior to GM’s shock exit announcement.
There are 185 Holden dealers in Australia operating over 200 showrooms, with franchise contracts tied into five-year agreements which had almost three years remaining.
Despite the extended deadline on dealers to agree with fair compensation, the ACCC said it “will continue its broader investigation into Holden’s engagement with dealers in relation to its withdrawal from Australia.”