Collective bargaining is when a business joins with its competitors to negotiate terms, conditions or prices with a common customer or supplier (the target business).

Negotiating as a group can have benefits for both the group and target business. For example, your business may not be able to produce enough volume for a large buyer on its own. But by joining with other small businesses, you can:

  • increase the amount you supply
  • save time and money on negotiations
  • have more influence over terms and conditions
  • expand to new markets.

Collective bargaining doesn’t cancel any existing legal obligations your business has with the target business, such as confidentiality clauses.

Target businesses do not have to negotiate with a collective bargaining group.

Collective bargaining groups need a class exemption from the Australian Competition and Consumer Commission (ACCC) or they risk breaking competition law. A class exemption is a legal protection for businesses that meet specific conditions. It allows some business conduct that would normally break competition laws, such as:

  • setting prices
  • controlling supply
  • making agreements that reduce competition.

Collective bargaining regulator

The ACCC regulates collective bargaining under the Competition and Consumer Act 2010.

The ACCC:

  • may allow collective bargaining if it’s in the public interest 
  • grants collective bargaining class exemptions.

Apply for a class exemption

You’ll need a class exemption from the ACCC before you start collective bargaining.

There are different processes for seeking a class exemption. The process you use will depend on the types of businesses involved and what activity you have planned.

Small business class exemption

The ACCC’s small business collective class exemption covers most small businesses. You won’t need to apply for a separate exemption, but you must submit a collective bargaining class exemption notice form.

This class exemption applies to:

  • businesses or independent contractors with a turnover under $10 million (each) in the last financial year
  • franchisees (regardless of turnover) bargaining with their franchisor
  • fuel retailers (regardless of turnover) bargaining with their fuel wholesaler.

All other class exemptions

Businesses that don’t fall into the small business class exemption group can use either the authorisation process or the notification process. 

Notification is the easier and faster option, but it is only available for some types of collective bargaining. 

Contact the ACCC if you need help working out which process to use.

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