Automotive snapshot: extended warranty periods, automated vehicles

Class actions in Australia

What is a class action?

A class action (also known as a “representative proceeding”) is a legal procedure that enables the similar claims of a number of persons (group members) against the same defendant(s) to be determined together. In a class action, a claim is brought by a representative plaintiff (or plaintiffs) on their own behalf as well as on behalf of group members, through consideration of a series of "common questions".

Role of the Court

Class actions have a number of specialised rules and procedures that differ from regular litigation. Plaintiffs can only commence class actions in higher Courts: the Federal Court of Australia and most (but not all) state Supreme Courts.

Because a class action can affect the rights of potential group members (many of whom may not be taking an active role in the case) the Court holds a special "protectorate" role. This includes supervision by the Court of requirements to give notice to potential group members of the existence of and key steps in the class action.

The class

The representative plaintiff must define the class in their written claim filed with the Court. Anyone who meets that definition is then considered a group member, unless they advise the Court that they do not wish to be part of the class by submitting an opt-out notice to the Court. Group members who do not opt out are bound by any Court judgment or settlement.

The representative plaintiff instructs the lawyers and makes decisions about the running of the class action like a plaintiff would in any other litigation. On the other hand, group members do not usually play an active role in the proceedings.

Some class actions are backed by a litigation funder who provides financial support for the running of the case in return for a percentage fee of any outcome (in addition to recovery of the costs they have paid on behalf of the class).

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Regulation of in-service safety for automated vehicles: due diligence obligations for Australian ADSE executive officers

Although executive officers could have new obligations under the NTC proposal, Australian-based ADSE officers who are not in a position to influence ADS safety will not be liable for managing risks that are outside of their control.

A national automated vehicle safety law in Australia is currently being developed, with further recommendations set to be made in the first half of 2021. A key recommendation from the National Transport Commission (NTC) is that executive officers of entities responsible for importing automated vehicles hold some responsibility for the in-service safety of automated vehicles.

In practice, much of the responsibility for in-service safety of automated vehicles is likely to be placed on the manufacturer, but under the proposed approach, executive officers of automated vehicle importers may also be required to ensure compliance with any new obligations relating to automated vehicles, and may be held liable for failures to take reasonable actions to ensure such compliance.

Background: the NTC's proposals and discussion paper

Since January 2019, the NTC has been developing and assessing a range of regulatory options to assure the safe operation of automated vehicles while they are in service. Following a series of consultations, the NTC recommended a regulatory approach to the Commonwealth, State, Territory and New Zealand Ministers making up the Transport and Infrastructure Council. This approach includes a specialised national regulator, a general safety duty on Automated Driving System Entities (ADSEs) and due diligence obligations on executive officers of ADSEs to ensure ADSEs comply with their general safety duty.

For practical purposes, an ADSE is, in most cases, likely to be the national sales company responsible for importing and distributing the relevant Automated Vehicles in Australia.

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ACCC opens door to OEMs offering extended warranty periods tied to vehicle servicing exclusively within authorised dealer networks – but with a catch

The ACCC has allowed Mitsubishi to offer extended warranty periods on condition consumers service their vehicles exclusively within the Mitsubishi dealer network. This will, no doubt, be of interest to many more in the industry and could well be the catalyst for similar initiatives being offered by others moving forward, though the ACCC has flagged that it could revisit its decision if it perceives over time that the arrangements are materially harming competition.

On 18 December 2020, the ACCC announced its decision not to object to Mitsubishi Motors Australia Limited (MMAL) offering an additional five years on its manufacturers' warranty to customers who commit to servicing their vehicles exclusively within the Mitsubishi Authorised Dealer Network.

MMAL lodged a notification of exclusive dealing with the ACCC in early September and the ACCC's decision to allow the notification to stand follows a series of public consultations and numerous submissions received by the ACCC raising concerns about the potential for the arrangement to significantly harm competition from independent service providers outside of the MMAL network. Although the ACCC's decision could open the door for other importers and distributors to similarly strengthen their own authorised dealer networks by encouraging or offering incentives to customers to service their vehicles within their respective authorised dealer networks only, the ACCC did sound a warning on this front.

In announcing its decision, the ACCC specifically noted that, while there is no basis at present to conclude that the notified conduct has the purpose, effect or likely effect of substantially lessening competition, the ACCC recognises the importance of competition provided by independent mechanics and could revoke the notification at a later date if, following implementation of the warranty arrangement, there is evidence that it is materially harming competition to the point that the public benefit of Mitsubishi (or others) offering extended warranty periods does not outweigh the public detriment of the condition that consumers service their vehicles exclusively within the authorised dealer networks.

To read the full article, which discusses concerns raised by the ACCC and considers what happens next, please click here.