The Federal Government yesterday released a Consultation Paper that seeks feedback on the design and implementation of extended unfair trading practices protections, which are currently being considered by the Senate, to small businesses and franchisees.

The release of the Consultation Paper follows an announcement made by the Prime Minister at a AADA Industry Briefing on 18 March 2026 where he said:

We need to listen to you and engage with you to make sure that Australian laws deliver a fair value for consumers and a level playing field for dealers. Because we know that in order to protect consumers from unfair practices, we have to protect dealers as well. This starts with Unfair Trading Practices.

The Government has received numerous reports of unfair trading practices particularly in situations involving information asymmetries and significant imbalances in bargaining power. While differences in bargaining power are a common feature of these relationships, they can increase the risk of unfair practices where they are substantial and not appropriately constrained. Existing legal frameworks, including the Australian Consumer Law, competition law and industry codes, provide important protections, but stakeholder feedback indicates they may not fully address all forms of harmful or unfair conduct, particularly in evolving and complex markets.

The limitation of existing legal frameworks was no more evident than the case in which Mercedes dealers in Australia challenged Mercedes-Benz Australia’s move from a dealership model to an agency model without providing any compensation to dealers. The Judge recognised that the conduct of Mercedes was commercially hard leaving the dealers worse off. The Judge also recognised that the dealers presented a powerful case on the facts but the Franchising Code did not have adequate protections against such conduct and he ultimately found that the conduct was not deemed unconscionable within the meaning of the Australian Consumer Law. Had the unfair trading practices protections been in place in the Franchising Code at the time, the outcome of the case may well have been very different.

The Consultation Paper specifically references a submission made by AADA in which it stated that the automotive sector faces unfair trading practices when engaging in commercial transactions with multinational manufacturers as part of a franchising relationship. The AADA provided examples including terminating dealer agreements and pressuring dealers to accept inadequate compensation within very tight deadlines, and making unilateral significant changes to the business model with little to no negotiation.

Amending the Franchising Code to provide protection to franchisee vehicle dealers would be a significant game changer for the automotive industry as it would greatly assist in providing a more level playing field for commercial dealings between dealers and distributors.

Interested parties are invited to provide responses to one or more of the consultation questions by 10 July 2026.

The Consultation Paper can be accessed here.

This article was written by Evan Stents, Lead Partner – Automotive Industry.