Consumer watchdog drops Holden case

The Australian Competition and Consumer Commission (ACCC) has dropped its investigation into Holden’s conduct towards its dealers as the brand pulled up stumps last year, ruling out court action against General Motors.

However, the consumer watchdog is still assessing whether Holden’s car servicing arrangements, including its decision to end its ‘lifetime’ capped-price service program, raises any issues under Australian Consumer Law (ACL) – an issue the ACCC has been studying, across various brands, for several years.

Private litigation launched by Holden dealers who refused to sign up to GM’s compensation offer for axing their franchise agreements is also continuing, which the ACCC said was partly behind its decision not to proceed with its own action.

The ACCC launched the investigation after receiving complaints about Holden’s conduct shortly before, and then after, it announced its withdrawal from the Australian market in February 2020.

These complaints primarily concerned the way in which Holden dealers were treated, including allegations that the company had approved new dealership acquisitions and continued to encourage investment in showrooms when the fate of the brand had already been determined at the car-maker.

The probe examined whether Holden had made false or misleading representations, and whether conduct towards some dealers was unconscionable in breach of the ACL or lacking in good faith in breach of the Franchising Code of Conduct.

In the wake of Holden’s exit, the federal government has also moved to protect consumers and dealers from being abandoned by car-makers who leave the market without adequately meeting their obligations, developing a revised franchising code with tough new penalties.

“While our investigation into Holden’s conduct left us with concerns about Holden’s treatment of some of its dealers, the ACCC has decided not to pursue these concerns, in large part because any ACCC action may prejudice the private actions taken by dealers,” said ACCC chair Rod Sims.

“This was a difficult decision based on a range of considerations.

“The behaviour by Holden has done much to damage the General Motors brand in Australia, and perhaps beyond.”

“The way Holden withdrew from Australia and managed the process and its relationships with long-standing loyal dealerships should serve as a lesson to all franchisors of what not to do in managing their relationships with franchisees and treating them fairly and with respect,” he added.

Holden continues to provide vehicle servicing through dealers that accepted the new agreement, while GM continues to operate in the Australian market through the sale of General Motors Specialty Vehicles (GMSV).

These are sold through a separate corporate arrangement that replaced Holden Special Vehicles (HSV).