General Motors Holden Australia has agreed to negotiate with its 185 dealerships in good faith about compensation for the US car company's withdrawal from the local market.
The commitment follows pressure from the Australian Competition and Consumer Commission for Holden to extend the deadline for acceptance of its compensation offer and to engage in good faith negotiations with dealers.
The ACCC said it was preparing for court action had Holden not changed its position and comply with requirements under the Franchising Code of Conduct and Australian Consumer Law.
The ACCC will, however, continue its broader investigation into General Motors Holden's engagement with dealers in relation to its withdrawal from Australia announced unexpectedly in February.
Holden's withdrawal means it will not renew current dealership agreements with Holden retailers in Australia.
The competition regulator said Holden dealers felt they had been placed under undue pressure by the car maker imposing an unnecessary deadline for acceptance of its proposed compensation package.
Dealers would have been forced to choose whether to accept the compensation offer before completing a dispute resolution process.
ACCC chairman Rod Sims said the regulator was concerned this conduct may raise concerns under the good faith obligations of the Franchising Code of Conduct and the unconscionable conduct provisions of consumer law.
"As franchisees, the dealers have less bargaining power than Holden," he said.
Holden had pressured its dealers to accept the compensation package by May 31 without giving a proper opportunity to negotiate and engage in a dispute resolution process.
"We believe this deadline was unnecessary and also unfair,"Mr Sims said.
Holden has proposed a transition package including compensation for the withdrawal of new vehicle sales, partial reimbursement for capital expenditure and a Holden service operations agreement.
The commitments do not cover the amount of compensation to be offered to dealers, but relates to a negotiation process in good faith.
"We expect Holden to negotiate fairly with dealers who have represented the Holden brand in Australia for decades. We will continue to closely monitor Holden's commitment to engage in good faith negotiations," Mr Sims said.
Holden also committed to meeting its obligations more generally under the Code and the Dealer Agreement Dispute Resolution provisions.
The company's name in Australia dates back to Holden's Motor Body Builders established in Adelaide in 1918 where it built carbodies for multiple overseas brands, later becoming a General Motors subsidiary in 1931.
Holden launched its first Australian car, the 48-215, or Model FX in 1948.
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The story GM bows to ACCC pressure to give Holden dealers a better deal first appeared on Farm Online.