$6 Million in Penalties for Honda Australia

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On the 15 December 2023 Honda Australia Pty Ltd (Honda) was hit with $6 million in penalties after the Federal Court found that it had made false or misleading representations to customers.

In February 2020 Honda restructured its operating model and as a result terminated a proportion of its authorised dealerships’ franchise agreements. Amongst these terminations was the following dealerships: Brighton Automotive Holdings Pty Ltd (Astoria), Tynan Motors Pty Ltd (Tynan) and Buick Holdings Pty Ltd (Burswood).

After its restructure, the Australian Competition & Consumer Commission (ACCC) alleged that Honda, between January 2021 and June 2021, represented to the customers of Astoria, Tynan and Burswood that these dealerships had or would be closed. The communication relied upon by the ACCC came in the form of text messages, emails and phone conversations like the below:

Your previous service dealer has closed so please find your nearest Honda Service Centre here.

The content of these communications, along with many others, misrepresented to consumers that these dealerships had closed down, when they simply had not. The ACCC Commissioner Liza Carver said that ‘Honda Australia deprived consumers of the opportunity to make an informed choice about their options for servicing their vehicle. It also caused likely financial loss to the dealerships by the false claim they were closing or had been closed.’  Honda admitted that in certain respects, it had breached Australian Consumer Law.

Penalties such as this against Honda have come as the ACCC has recently completed targeted compliance checks on franchisors. The December 2023 ACCC report ‘Unfair Contract Terms in Franchise Agreements’ outlines the concerns the ACCC has about breaches of Australian Consumer Law by franchises. This report was conducted to ensure that franchisees received protections under the Competition and Consumer Act 2010 (Cth) and the Australian Consumer Law. The report was released as a warning to franchisors and came just in time for the fine against Honda to be pursued. The correlation highlights that the ACCC is making a concerted effort to protect the rights franchisees and ensure adherence of Australian Consumer Law by the franchising sector. Ms Carver said “the substantial penalty sends a strong message to all businesses about the consequences for making misleading statements to consumers”.

For any questions regarding Australian Consumer Law, or concerns that you’ve been impacted by misleading or deceptive conduct, please contact the BAL Lawyers Litigation and Dispute Resolution team on 02 6274 0999.

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