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Retailers granted authorisation to collectively negotiate with landlords

The ACCC has granted interim authorisation allowing retailers to collectively bargain with landlords. The application was lodged on 17 April 2020, by the Australian Retailers Association (ARA), on behalf of itself and its members, to enable them to collectively negotiate with landlords regarding the rental support to be provided to retail tenants who are adversely impacted by COVID-19, including in relation to the appropriate information to be exchanged with landlords for that purpose. This follows the ACCC’s  interim authorisation on the 3 April, allowing shopping centres to co-operate to support retail tenants financially impacted by COVID-19.

The interim authorisation, granted to the Australian Retailers Association and its current and future members, will also allow retailers to share information relevant to the negotiations including in relation to requests by landlords for certain information as part of considering and negotiating support to be provided in the context of COVID-19.

“We see a clear public benefit in allowing retailers to work together in the negotiations with landlords as it will help those tenants who are experiencing financial hardship during this pandemic to reach a fair outcome,” ACCC Chair Rod Sims said.

“We need to maintain strong competition in the retail sector and supporting these businesses will help with economic recovery once the pandemic subsides.”

On 3 April 2020 the ACCC granted conditional interim authorisation to Scentre Group and the Shopping Centre Council of Australia (SCCA) to enable shopping centre landlords to discuss, share information and coordinate relief to be provided to small and medium enterprise (SME) tenants financially impacted by COVID-19.

In the application letter, the ARA stated it was aware that shopping centre landlords are making urgent demands of tenants in respect of their negotiations for rental relief, including requiring tenants to “open their books” and sign non-disclosure agreements. However, landlords are not providing an equivalent level of information disclosure and transparency. The ARA considers such conduct further increases the imbalance of information and bargaining power that already exists in the relationship between landlords and tenants, given landlords are discussing, sharing information and coordinating the relief they will provide.

The CEO of the ARA, Paul Zahra, welcomed the ACCC’s decision to grant interim authorisation, saying it has “levelled the playing field” for retailers struggling with costs during the current Coronavirus episode.

Zahra said the ACCC’s decision meant all ARA members – including those from chains with collective turnover above the $50 million threshold to which the Code applies – would also be able to participate in group discussions with landlords.

“The ARA has many members above the $50 million turnover threshold that are also facing existential challenges as a result of near-total collapse in their trade; the Code does stipulate the principles it contains should apply to all retail leasing negotiations – not just for small businesses – and this ruling will assist them to take advantage of that,” Zahra said.

Zahra also noted the decision applied to all groups of retailers sharing a common landlord, and was not restricted to businesses located in major shopping centres.

The authorisation is voluntary and temporary, and does not include individual tenants exchanging information about the amount of their rent or any rent incentives they were previously granted.

“As with all of the temporary arrangements that industries are looking to implement as a means to deal with the COVID-19 issues they are facing, we will keep under consideration when they are no longer necessary,”  Sims said.

Having granted interim authorisation for the arrangements, the ACCC will now seek feedback on the application for final authorisation which is sought for a period of 12 months from the date of authorisation.

The Australian Retailers Association is Australia’s largest retail industry association and provides advice, education and advocacy for its approximately 7,500 members.

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