Dealers kick off $650 million litigation against Mercedes-Benz

Australian Mercedes-Benz dealers received a boost in their $650 million legal battle with German manufacturer after the Federal Court of Australia agreed to a fast-tracked hearing date.

A trial date has been scheduled for August next year with the matter to return before Justice Beach in February 2022.

The Australian Automotive Dealers Association (AADA) said Mercedes in German is seeking to force through a new business model which will see Australian Dealers shift from being independent self-run businesses, who own their own inventory, to become mere agents and re-sellers for Mercedes with drastic implications for the future of their businesses.

More than 80 per cent of Australian Mercedes dealers have combined forces to fight the changes to the Australian industry. They say the case is a critical test of Australia’s Franchising Code of Conduct and Australian Consumer Law, with far reaching implications for every franchise business in Australia. 

Speaking on behalf of the dealers, James Voortman, CEO of the AADA said, “We are delighted the Federal Court agrees with us that the issues in our case are urgent and deserve to be heard as soon as possible.  We can now take the fight up to Mercedes-Benz without delay to seek justice on behalf of the Australian industry.

“Despite strenuous efforts by Mercedes-Benz to delay the start of proceedings, we are pleased to have a trial date for next year and for a process that will see us back in court in February at the latest.

Voortman said the matter is a watershed issue for Australian consumers and the entire Australian franchise industry.  If Mercedes is successful in forcing these changes on the industry, history shows competition will go down and car prices will go up.

“Every franchise owner will be watching this case closely because if the Colossus Mercedes-Benz can appropriate the goodwill of Australian car dealers without compensation, any franchisee could be at risk of the same threat,” Voortman said.

“Fundamentally, franchisees are the back-bone of Australian small business.  Most are family businesses who have built up the value in their business through sheer hard work and created real value for themselves and their local communities.  If Mercedes creates a precedent, where that value can be captured for its own benefit without compensating franchisees, then any franchisor will be able to do the same.”