A Federal Court Judge has thrown out a $650m claim brought against Mercedes-Benz Australia Pacific (MBAUP) by 38 members (out of 50) of its local retailers in regard to the implementation of an agency network in January 2022.
In an agency system, the distributor owns and controls the vehicle inventory and can set national recommended retail pricing across the franchise network, effectively paying the retailer a small fee for every new vehicle that its sells.
The Australian Financial Review says that Justice Jonathan Beach ruled in favour of the local luxury car distributor, finding that the dealers did not prove unconscionable conduct by the distributor in setting up the agency network.
The 38 Mercedes-Benz retailers alleged they had been bullied into signing new agency agreements which had robbed them of millions of dollars in goodwill which they had accumulated over many years.
According to the AFR Justice Beach says he accepted that the dealers were ultimately placed in a position of situational disadvantage and possibly constitutional disadvantage in terms of the agency model.
“But in a sense this was in part self-induced by the dealers’ entry into the dealer agreements and a willingness, it must be inferred, to accept the risks and the risk allocation enshrined in those agreements including the risks inherent in the contractual power of [Mercedes-Benz Australia] to issue the [non-renewal notices] without cause,” Justice Beach says.
“They made the relevant capital investments knowing of or when they ought to have known of such risks. And on a broader front, the dealers were well-heeled individuals and corporations that hardly had any socio-economic vulnerability,” he says.
According to the AFR only 46 pages of Justice Beach’s 653 page judgement was made publicly available. It says the rest has been temporarily redacted because of confidentiality claims that have not been resolved.
Mercedes-Benz Australia Pacific has welcomed the courts decision. A spokesperson told the AFR that it’s focus continues to be on delivering luxury, high-performance cars for it valued customers around Australia.”
Australian Automotive Dealer Association (AADA) chief executive James Voortman told the AFR that the 38 dealers would be disappointed with the judgment.
“The dealers are weighing up their options and as an industry, we will carefully consider this judgment as more detail comes to hand,” Voortman says.
