Holden Australia’s behaviour to dealers a lesson for franchisors, says ACCC chair

By Sarah Stowe | 29 Nov 2021 View comments

ACCC Chair Rod Sims has cautioned franchisors to avoid the behaviour shown by Holden towards its Australian dealers just before and after the company’s withdrawal from the Australian market.

“The way Holden withdrew from Australia and managed the process and its relationships with long-standing loyal dealerships should serve as a lesson to all franchisors of what not to do in managing their relationships with franchisees and treating them fairly and with respect,” Sims said.

Sims’ comments follow the Australian Competition and Consumer Commission’s completed investigation into whether Holden had made false or misleading representations, and whether the conduct towards some dealers was unconscionable in breach of the Australian Consumer Law or lacking in good faith in breach of the Franchising Code of Conduct.

Soon after Holden’s announcement, the ACCC received a number of complaints from dealers who believed the Australian company had prior knowledge of General Motors’ plan to exit the brand from Australia, yet continued to approve new dealership acquisitions and encouraged further investment in existing dealerships.

“Many Holden dealers felt badly let down by Holden and had invested significant amounts of money into the dealerships that would soon stand idle,” said Sims.

The investigation also examined whether Holden had negotiated with dealers in good faith in relation to compensation packages for terminating the franchise agreements before their expiry in December 2022.

Most dealers agreed to the compensation offered by Holden, however others started private legal actions.

Sims said “While our investigation into Holden’s conduct left us with concerns about Holden’s treatment of some of its dealers, the ACCC has decided not to pursue these concerns, in large part because any ACCC action may prejudice the private actions taken by dealers. This was a difficult decision based on a range of considerations.

“The behaviour by Holden has done much to damage the General Motors brand in Australia, and perhaps beyond.”

 

Separately, the ACCC is still assessing whether Holden’s car servicing arrangements, including Holden’s decision to end its ‘lifetime’ capped price servicing program, raise any issues under the Australian Consumer Law.