Mercedes-Benz court case over change to dealer model kicks off with a bang

Mr Archibald alleged that Mr Castle was referencing emails between Mercedes-Benz Germany and Mercedes-Benz Australia, a type of document the parties might have agreed was confidential.

“I can’t for the life of me see any reason I should protect this document for your benefit – just because something is about Mercedes-Benz’s strategy doesn’t make it confidential,” Justice Beach responded.

“And I won’t have you standing up and interrupting every time a document of this nature is referred to. In fact, I can’t for the life of me work out how this document, which has no financial data and no forecasts included, is confidential.”

Local dealers ‘bullied’

Justice Beach said the Mercedes-Benz strategy was at the heart of the $650 million lawsuit brought by Australian dealers over the carmaker’s decision to move to a fixed-price agency model.

Local dealers say they were bullied into signing new contracts that stripped them of the goodwill they had built up over years, violating the Australian Franchising Code and engaging in unconscionable conduct in violation of the Australian Consumer Law.

Under the new model, which came into effect on January 1, Mercedes-Benz retains ownership of its cars while dealers act as agents and must sell cars at a fixed price for a set commission. Previously, the dealers purchased cars directly and had the flexibility to choose the sale price.

At the suggestion that he might like to close the court to preserve confidentiality, Justice Beach responded: “I’m not going to do that, you’re in the Federal Court of Australia, not the Supreme Court of Victoria,” he said.

Mr Archibald is not to be confused with Robert Craig, SC, who is representing Mercedes-Benz Australia.

Mr Castle stressed that a large part of the Mercedes-Benz dealers’ case lay in whether the German parent company genuinely intended to include dealers in its deliberations over a shift in business model.

He presented internal company presentations that detailed the planned shift to an agency model, which excluded compensation for dealers, from as far back as 2016.

Discussions between Mercedes-Benz executives in Stuttgart showed the thinking that “brand competition could be eliminated and pricing optimized” if the company shifted towards an agency model, Mr Castle said.

Changes in the delivery of vehicles would also repatriate large swaths of customer data that Mr Castle said Mercedes-Benz planned to underpin a new pricing regime.

“This flies in the face of the idea that Mercedes-Benz was shifting models because it wanted to reduce costs for customers,” Mr Castle told the court.

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