Australia’s leading consumer watchdog is paying close attention to switching certain brands to fixed prices for new cars – after a number of auto giants discovered a loophole that allows them to set prices non-negotiable prices in all showrooms, which would be illegal if dealerships did. so.
The move to fixed prices for new cars by a number of major car brands – including Honda and Mercedes-Benz – has caught the attention of Australia’s leading consumer watchdog, which says it is monitoring the rollout of the business model. controversial and review the laws. that govern it.
Japanese automaker Honda switched to non-negotiable fixed prices for new cars in Australia from July 1, 2021, and German marque Mercedes-Benz is set to make the switch locally from January 1, 2022.
The problem is, if new car dealerships set fixed prices for all of their models and showrooms, that would be considered illegal under Australian Consumer Law.
However, a number of auto giants have exploited a loophole in Australian regulations that allow them to set fixed prices for new cars – by changing contracts with dealers and renaming them as “agents” of sale.
The Australian Competition and Consumer Commission (ACCC) is now taking a keen interest in the decision of certain brands to set fixed prices for new cars and its impact on consumers – and its impact on franchise dealers. who have invested millions of dollars over the years and / or decades to establish their businesses and develop their customer base.
The ACCC has taken the auto industry to task since 2015 after numerous complaints across the auto industry – and the failure of a number of major brands to meet their warranty and Australian warranty law responsibilities. consumption.
The ACCC has since imposed millions of dollars in fines – and completed lawsuits and / or enforceable undertakings – against 10 makes of cars to date.
Some jurisdictions in the United States and Europe do not allow switching to fixed prices for new cars because this is anti-competitive behavior.
And while some car brands say they are considering implementing a fixed price business model in Europe, there is great uncertainty as to whether this does not fall under EU Article 101 (the laws which prohibit cartels and other agreements which could disturb free competition).
Asked about the decision of some auto giants to set fixed prices in Australia, ACCC Chairman Rod Sims said To drive in an exclusive interview: “We have a whole series of concerns.
“We are concerned about the way (automakers) treat their dealers and the way they sometimes end dealership agreements, and how they move to the business model (fixed price),” Sims said. .
The ACCC chief said it may be necessary to revise Australian law if it has not kept up to date with “loopholes” or new interpretations of anti-competitive business practices.
“A lot of dealership concerns are things that we cannot deal with under the law,” said Mr. Sims. “But where we can deal with them, we will certainly investigate whether there have been any violations (of anti-competitive behavior or of consumer law).
“In addition, we must always ask ourselves whether the law is adequate enough to address the range of issues that impact the auto industry and the car buying and ownership experience for consumers. “
Representatives of Honda and Mercedes-Benz have already indicated that they are acting within the law.
And the ACCC – or any other government authority in Australia – has yet to take action beyond “overseeing” the rollout of the fixed-price new car business structure.
ACCC’s interest in switching certain car brands to fixed prices for new cars comes as a large group of Mercedes-Benz dealers – which account for around 80 percent of the brand’s showrooms in Australia – are suing the German auto giant in Federal Court for challenge the new economic model.
Although all Mercedes-Benz dealers signed the new contracts, those who opposed the Federal Court ruling said they did so under duress “with a gun pointed at our temple”, while others who have signed – but have not joined the lawsuit – have complex trade deals with Mercedes-Benz in other markets they fear losing.