The Federal Court of Australia imposed penalties totalling $6 million on Honda Australia Pty Ltd last Friday after finding that Honda engaged in misleading or deceptive conduct, and made false or misleading representations to customers of former authorised Honda dealerships, Brighton Automotive Holdings Pty Ltd (Astoria), Tynan Motors Pty Ltd (Tynan) and Buick Holdings Pty Ltd (Burswood).
The fines follow injunctive proceeding commenced by HWL Ebsworth on behalf of Astoria to restrain Honda from sending false or misleading representations to customers of Astoria.
The ACCC alleged that between about January 2021 and June 2021, Honda Australia represented to customers of Astoria, Tynan and Burswood that the dealerships would close or had closed and would no longer service Honda vehicles, when this was not the case. These representations were allegedly made in emails, text messages and phone conversations with customers.
The communications were made in the context of Honda Australia restructuring to an agency mode which resulted in some franchise agreements with authorised dealers being terminated, including agreements with Astoria, Tynan and Burswood. However, the Astoria, Tynan and Burswood dealerships continued to operate independent service centres to service and repair vehicles, including Hondas.
Honda Australia admitted that in certain statements to thousands of customers it had breached the Australian Consumer Law by making misleading representations that the dealerships had closed and would no longer service Honda vehicles.
ACCC Commissioner Liza Carver said ‘Honda Australia deprived consumers of the opportunity to make an informed choice about their options for servicing their vehicle. It also caused likely financial loss to the dealerships by the false claim they were closing or had closed.’
The fine against Honda Australia comes off the back of a warning from the ACCC to franchisors to urgently review and amend their standard form franchise agreements or be prepared for potential enforcement action after a review of franchising contracts found wide-ranging concerns. In a statement from the ACCC, it said that ‘Franchisors are on notice that we will be watching, and those who fail to address the wide-ranging concerns we outline in our report are at risk of legal action by the ACCC and franchisees.’ Under the Franchising Code, new car motor vehicle dealer agreements are deemed to be franchise agreements.
A report published by the ACCC on last Friday outlines the ACCC’s findings and concerns after it recently completed targeted franchising compliance checks. The report provides guidance for franchisors about complying with the unfair contract terms laws after the Australian Consumer Law was amended to introduce penalties from November 2023. The ACCC report can be accessed from the following link: Unfair contract terms in franchise agreements. (accc.gov.au).
This article was written by Evan Stents, Lead Partner – Automotive Industry Group.
