The peak consumer and business watchdog has ended its investigation into Holden’s shock shutdown in Australia, but court battles continue with US car giant General Motors over unfair compensation claims for sudden dealership closures.
The Australian Competition and Consumer Commission – the nation’s peak consumer and business watchdog – has ended its investigation into the shock shutdown of Holden and the impact on car owners and dealers.
However, US car giant General Motors – which operated under the Holden brand in Australia from 1948 to the end of 2020 – is still subject to a class action by 11 former Holden dealerships who claim they have not been fairly compensated for the sudden showroom closures and “siesmic” disruptions to their businesses.
A statement issued by the ACCC today said: “Soon after Holden’s announcement (in February 2020 that it was exiting Australia), the ACCC received a number of complaints from dealers who believed Holden had known that General Motors would withdraw the Holden brand from Australia for many months before publicly announcing it, and had approved new dealership acquisitions during this time and encouraged some dealers to continue to invest in their dealerships, including by expanding or renovating their premises.”
ACCC Chair Rod Sims said: “Many Holden dealers felt badly let down by Holden and had invested significant amounts of money into the dealerships that would soon stand idle.
“We started an investigation into Holden’s conduct towards its franchisee dealerships because Holden’s conduct appeared to be very concerning.”
Mr Sims said although the ACCC had “concerns about Holden’s treatment of some of its dealers,” the watchdog decided not to pursue the matter further in case any action by the ACCC might “prejudice the private actions taken by dealers.”
Mr Sims said the decision to not pursue further action 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.”
However, aggrieved Holden dealers may still have their day in court, with 11 dealerships having already commenced a class action against the US car giant.
“General Motors isn’t off the hook just yet,” said James Voortman, CEO of the Australian Automotive Dealers Association, which represents 3500 showrooms nationally and their 50,000 employees.
“General Motors is still in court with a number of their dealers, and the ACCC is yet to rule out further possible action in relation to General Motors axing its ‘lifetime’ servicing pricing guarantees,” said Mr Voortman.
In response to General Motors’ decision to quietly drop the ‘lifetime’ guaranteed service price package in the wake of the Holden shutdown, the ACCC said: “Separately, the ACCC is still assessing whether Holden’s car servicing arrangements, including Holden’s decision to end its ‘lifetime’ capped price servicing program, raise any issues under the Australian Consumer Law.”
Furthermore, a number of former Holden dealers – speaking to Drive on condition of anonymity – have in recent weeks accused General Motors of using delaying tactics over its outstanding court action, and of trying to break up the class action by dealing with each case separately.
Today’s announcement by the ACCC – and the ongoing court action against General Motors – means the Holden shutdown saga is far from over.
The ACCC said it was obliged to intervene on behalf of Holden dealers in May 2020 after the watchdog received complaints that General Motors had created an “arbitrary deadline for dealers to accept its proposed compensation package,” which meant “dealers would have been forced to choose whether to accept the compensation offer before completing a dispute resolution process.”
Following pressure from the ACCC, the deadline was extended and most dealers eventually agreed to the compensation offered by General Motors.
“Importantly,” the ACCC noted today, “others (dealers) started private legal actions.”
“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,” Mr Sims said.
Joshua Dowling has been a motoring journalist for more than 20 years, spending most of that time working for The Sydney Morning Herald (as motoring editor and one of the early members of the Drive team) and News Corp Australia. He joined CarAdvice / Drive in late 2018, and has been a World Car of the Year judge for 10 years.