Aussie retailers in $650m Mercedes agency model lawsuit

  25 October 2021

Mercedes-Benz retailers in Australia have filed a $650m (£350m) lawsuit against the company for its planned switch to a fixed-price agency model. 80% of Australia’s 65 Mercedes-Benz retailers have joined forces in the Federal Court case, claiming they have been forced to accept new contracts “with a gun to their head”.

“Mercedes has forced its dealers to sign oppressive new agreements at short notice with the threat they could lose their businesses and without paying any compensation for the value built up in these businesses,” said James Voortman, CEO of the Australian Automotive Dealers Association.

In contrast, Tony Weber, CEO of the Federal Chamber of Automotive Industries (an SMMT equivalent) appeared to criticise the action. “Innovation and competition are kings across the retail landscape,” he said. “Despite this, some car dealers want to immune themselves from change, even when customers are crying out for new ways to do business.

“Efficient, effective markets rely on innovation, transparency and flexibility – the new car market is no different.”

The retailers believe Mercedes-Benz is exploiting a legal loophole: by making them sales agents, fixed vehicle prices are not deemed anti-competitive under Australian law. However, the same structure would be illegal if individual retailers representing one OEM colluded on prices.

In response to the legal action, Mercedes-Benz said it will be “defending our position vigorously” and the agency model will “better deliver to the demands of modern customers.

“It will provide greater price transparency, better choice, and a larger model availability for all customers. It is disappointing that some dealers have taken this action, but we believe the Mercedes-Benz (fixed price) agency model is compliant with all relevant Australian laws.”

Mercedes-Benz plans to introduce the agency model in Australia from 1 January 2022, after three years of discussions with retailers.

Also see our story on Mercedes-Benz India’s agency switch

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