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Australian dealers lose agency legal battle with Mercedes-Benz

A legal case brought by 38 car dealers in Australia against Mercedes-Benz has been thrown out by a Federal Court.

The dealers brought the case against Mercedes claiming new agency agreements stripped them of the goodwill they had built up over the years.

In January 2022 Mercedes-Benz introduced the agency model in Australia where it took ownership of stock, taking it off dealers’ books and also introduced national pricing.

The Honourable Justice Jonathan Beach handed down his judgement on the Federal Court Case – Mercedes-Benz Australia Pacific vs. Mercedes-Benz Dealer Litigants Group and dismissed the dealers’ claims.

The Australian Automotive Dealer Association said: This is clearly a very disappointing outcome and AADA will work hard to understand this judgement and fight for a better system for franchised new car Dealers.

“This case is obviously of great interest to all of Australia’s franchised new car Dealers and the AADA will review the judgement in greater detail and provide a comprehensive update to members on the results of the case and wider implications for the industry.

“The Government is currently undertaking a comprehensive review of the Franchising Code which presents a significant opportunity for the AADA to use the learnings from this case in our engagements and response.

“The AADA will highlight the need for stronger mandatory protections and advocate for changes to the Code to ensure it can sufficiently protect Australian Dealers.”

Sue Robinson, Chief Executive of the National Franchised Dealer Association (NFDA), said: “The decision may be appealed, and the NFDA will provide an update in due course; however, the case is, in any event, of limited relevance to the position of dealers or agents in the UK, where, despite certain similarities, the regulatory position is different.  For example there is currently no ‘franchising code’ for the automotive sector in the UK, although the NFDA is working towards the development of such an instrument, following guidance issued by the UK’s Competition and Markets Authority.

“The outcome of the Australian case should not be regarded as a universal validation of the agency model, in whatever form; indeed, the Competition and Markets Authority is in no way constrained by this decision were it minded to undertake a more targeted examination of any transition to agency or the terms applied to dealers in the UK.”






Click here to get the full response from the AADA and a public summary of the judgement

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