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NSW Motor Dealers and Repairers Bill Creates National Inconsistency

Motor vehicle distributors in New South Wales will be hit with confusing and nationally inconsistent regulations if the NSW Government’s Motor Dealers and Repairers Bill 2013 passes through Parliament in its current form.

The Bill, introduced into NSW Parliament last week, is supposedly part of the NSW Government’s commitment to reduce red tape in the motor dealer and repair industry. Unfortunately, Part 6 of the Bill, which deals with dealer/distributor relationships, misses this point. The provisions outlined in Part 6—concerning unfair contract terms and unjust conduct—are simply unnecessary and will lead to inconsistent national regulation, increased regulatory cost for motor vehicle distributors and confusion for the broader industry.

Federal Chamber of Automotive Industries Chief Executive Tony Weber said dealer and distributor relationships are appropriately covered by the provisions of the Federal Government’s Competition and Consumer Act and National Franchising Code. “The national legislation provides a consistent approach for dealers and distributors and this is a key element in business efficiency,” he said.

“Without any consideration of equity in commercial contract the Bill seeks to hold motor vehicle distributors to a higher level of account than any other business operator.

“Under the national legislation and code, prospective dealers have the opportunity to examine and seek expert advice on any franchised agreement to ensure they fully understand all the issues, terms and provisions prior to signing any proposed franchise agreement. This includes the opportunity to discuss the proposed agreement with former or current franchisees, an important step for those new to the motor vehicle industry.”

Mr Weber noted that recently, the Federal Government announced a comprehensive review of Australia’s national competition policy. “The FCAI strongly recommends the NSW Government support the Federal Government on their broader policy review, rather than push ahead with unnecessary and unworkable proposals—such as those presented in Part 6 of Motor Dealers and Repairers Bill,” he said.

In 2010, the National Franchise Code was amended to include significant disclosure and procedural improvements. Following this, there have been noticeable improvements in franchisee/franchisor commercial relationships. To overlay those achievements with this imbalanced legislation would be a retrograde step. The overall process of negotiation for any motor vehicle franchise is, of course, underpinned by the principles of good faith. The FCAI recently submitted to the Federal Government that the specific inclusion of a reference to the common law principles of good faith would be appropriate within the National Franchise Code.

For further information contact:
Sheena Ireland, Communications Manager
02 6229 8221 / 0458 038 555