ACCC not to pursue Holden over pullout

Holden’s treatment of its dealers as it withdrew from the Australian car market “has done much to damage the General Motors brand” but the company has escaped further action by the nation’s consumer watchdog.

The Australian Competition and Consumer Commission says after a lengthy investigation into Holden’s conduct it will not pursue the issue, partly so as not to prejudice private legal action being taken by some dealers.

“While our investigation into Holden’s conduct left us with concerns about Holden’s treatment of some of its dealers, the ACCC has decided not to pursue these concerns,” Chairman Rod Sims said in a statement on Friday which described the decision as “difficult”.

“The behaviour by Holden has done much to damage the General Motors brand in Australia, and perhaps beyond,” he said.

“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.”

GM announced its plans to withdraw from the Australian market in early 2020.

Soon after the ACCC said it received a number of complaints from dealers who believed Holden had known of GM’s plans for many months.

They claimed the company had approved new dealership acquisitions during this time and encouraged some dealers to continue to expand or renovate their premises.

“Many Holden dealers felt badly let down by Holden and had invested significant amounts of money into the dealerships that would soon stand idle,” Mr Sims said.

The ACCC examined whether Holden had made false or misleading representations and whether the conduct towards some dealers was unconscionable, in breach of the Australian Consumer Law, or lacking in good faith, in breach of the Franchising Code of Conduct.

A Senate committee also investigated Holden’s conduct and found there was a clear imbalance in the bargaining power between Holden and its dealer network in termination and compensation negotiations.

During the inquiry, some of the most damning testimony came from former senior Holden executive John Crennan who said GM’s tactics were both “disrespectful and hurtful” to dealers, owners and fans.

Mr Crennan, who had also headed up Holden Special Vehicles and the Holden Racing Team, said no one could deny GM the right to exit the Australian market if it was no longer profitable.

“But I believe all stakeholders, past and present are certainly entitled to question what appears to be, to use a football term, a king hit behind play,” he said.

GM completed its shuttering of the Holden brand by the end of last year.

Its decision followed a period of declining sales and increased market competition and came about three years after it shut down its vehicle assembly operations in Australia.

The closure prompted strong criticism from both sides of politics, with the major parties pointing to the more than $2 billion in government incentives the company had received for more than a decade before it stopped local manufacturing.

But Holden said it had chased down “every conceivable option” to keep it afloat and could not come up with a plan that would support a competitive business and provide a sufficient return to investors.