Collective bargaining begins to bite

September 9, 2010: In a development which should interest independent photo retailers, the Australian Competition and Consumer Commission has granted interim authorisation to allow buying group, Liquor Stax Australia, to collectively bargain with a range of suppliers.

Independent liquor stores have been struggling to compete against the buying power of the Woolworth-Coles retailing duopoly.

This development follows the earlier granting of an authorisation to newsagents, via the Australian Newsagents Federation, to form national collective bargaining groups in relation to the supply of magazines on behalf of its members.

(Individual newsagents have for decades been exploited by the large publishers in negotiating a reasonable margin for the sale and distribution to consumers of magazines and newspapers.)

Collective bargaining in Australia is outlawed between businesses, but changes to Trade Practices legislation several years ago enabled the ACCC to permit businesses to band together to better negotiate with large suppliers under certain circumstances.

Clear imbalances exist in photographic retailing in negotiating prices for equipment, paper and chemistry and photographic hardware, which have prevented smaller retailers from coming close to competing on price with larger players.

If a group representing those smaller retailers can show that key suppliers are imposing unfair market conditions, and demonstrate a public benefit in combining their buying power, collective bargaining rights could be granted.

(So for example, the remaining independent specialist customers for Fujifilm equipment, paper and chemistry could combine to negotiate terms and conditions something slightly closer to what Harvey Norman and Big W are getting!)

Liquor Stax is seeking authorisation on behalf of a group of around 200 small businesses comprising liquor merchants and hotels, to collectively bargain with around 60 suppliers of alcohol, cigarettes, poker machines and confectionery, as well as services such as advertising, insurance and communications. Member participation in any given transaction is voluntary and imposes no restrictions on a member’s choice of suppliers.

Authorisation provides immunity from court action for conduct that might otherwise raise concerns under the competition provisions of the Trade Practices Act 1974. Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.

To review the Liquor Stax submission to the ACC click here. (Note: The interesting stuff is towards the end of the document.)