ACCC in high gear on the automotive industry — conduct vis-à-vis independent repairers in focus

By Adrian Kuti, Hamid Pourahmary
28 Apr 2022
OEMs and distributors need to be careful about representations they give to their customers about who can service their vehicles, as the sector deals with higher ACCC scrutiny and a new motor vehicle service and repair information sharing scheme.

Related Knowledge

The ACCC has instituted proceedings in the Federal Court against Honda Australia Pty Ltd for allegedly making false or misleading representations to consumers that two of their formerly authorised dealerships had closed, and informing consumers that they could no longer get their cars serviced at those dealerships, potentially limiting consumer's choice as to where they get their cars serviced.

Following a restructuring in 2019, Honda moved from a franchised model to an agency model and terminated 36 of its authorised dealerships' franchise agreements on 30 June 2021.  This included the two former authorised Honda dealerships: Brighton Automotive Holdings Pty Ltd (Astoria) and Tynan Motors Pty Ltd in NSW (Tynan).

The ACCC alleges that, during the period between January 2021 and June 2021, Honda proceeded to communicate to customers through SMS reminders, emails, phone calls and an announcement on Honda's website, that Astoria and Tynan had closed, or would close, and that Honda owners would no longer be able to service their Honda vehicles at these dealerships.

The ACCC alleges that these actions by Honda were false, misleading or deceptive within the meaning of the Australian Consumer Law (ACL) because Astoria and Tynan were not closing, did not close, and at all material times continued to be able to service, repair and provide spare parts for vehicles, including Honda vehicles.

The ACCC is seeking declarations, pecuniary penalties and costs for Honda's conduct.

Heightened scrutiny and the start of the Motor Vehicle Service and Repair Information Sharing Scheme

It is no surprise that the Commission was quick to take Honda to court over the above conduct, given that the regulation of motor vehicles and caravans was included in the ACCC's 2022-23 enforcement priorities announced in March 2022.

The Honda proceedings have also been commenced by the ACCC in the context of the Motor Vehicle Service and Repair Information Sharing Scheme (Scheme) commencing on 1 July 2022.  The Scheme creates three main obligations aimed at ensuring that independent outlets can access information necessary to enable them to service and repair vehicles and provide consumers with choice between authorised and independent service providers.  Pecuniary penalties of up to $10 million will apply to certain of these obligations, if contravened.

Under the Scheme, a manufacturer (referred to as a data provider) who shares service and repair data with one or more authorised suppliers is also required to:

  • supply that same service and repair information to all Australian repairers and registered training organisations (RTOs) who request it (subject to certain qualifications);
  • charge no more than the fair market value for such information; and
  • supply the information in a timely manner in response to a request.

The Scheme's objective is to promote competition between Australian repairers of motor vehicles by mandating access to information on fair and reasonable terms.  The idea is that this will enable consumers to have more choice as to where they get their vehicles serviced and encourage the safe and secure accessibility of such information.

Key takeaways

The ACCC is closely watching the automotive industry.  We encourage OEMs and distributors to review that they have the right systems in place to ensure that communications sent to customers do not misrepresent who can service or repair their vehicles.

The commencement of the Scheme also means that businesses should prepare and ensure that they are able to supply the information and meet the obligations posed by the new legislation, as it is likely the ACCC will be closely monitoring compliance of the Scheme once it comes into effect.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.