A popular car manufacturer could be forced to fork out millions after admitting falsely telling customers at three service centers that the businesses would be closed.
Federal Court Judge Nathan Moshinsky on Friday recommended Honda pay $6 million after it was sued by the Australian Competition and Consumer Commission.
The Japanese automaker admitted in court that it called, texted and emailed more than 1,000 customers with false claims that three former Honda dealerships were closing.
In his ruling, Judge Moshinsky said Honda had violated consumer law and may have “caused a loss to the dealers through loss of business” to the dealers.
'Although the offenses were not intentional, they were still serious. The number of violations is large (and) occurred over a period of months,” he said.
'Honda is a big company; to achieve specific and general deterrence, a high fine is therefore necessary. Honda's cooperation with the ACCC reduces the fine.”
The Japanese automaker admitted in court that it called, texted and emailed more than 1,000 customers with false claims that three former Honda dealerships were closing
The lawsuit filed by the consumer watchdog centered on three former Honda dealers; Astoria in Victoria, Tynan Motors in NSW and Burswood in Western Australia.
The three centers operated as franchise dealerships for Honda before a strategic review in March 2020 determined the car company would abandon the franchise model.
As a result, dealership agreements between Honda and nationwide dealers were terminated, and only a select few were given the opportunity to remain with the automaker.
The court was told that many dealers had ceased all operations as a result of the termination, while others – including the three in the lawsuit – became independent service centres.
The two-day hearing heard from some of Honda Australia's senior managers, including the company's director, Carolyn McMahon.
The executives addressed concerns expressed by dealers about the wording of customer correspondence, as well as the use of a media campaign to promote Honda dealers.
In January 2021, during one phone call, a customer asked if the Astoria dealership in Brighton was 'still going to stay'.
“No… that dealership is closing,” a Honda agent responded.
Emails sent to customers at the Astoria and Tynan dealerships said they were “now closed.” Later emails alternatively stated that they were no longer authorized Honda dealers.
Federal Court Judge Nathan Moshinsky on Friday recommended Honda pay $6 million after it was sued by the Australian Competition and Consumer Commission
Judge Moshinsky said the “misleading” emails were mitigated to some extent by communications from Astoria and Tynan to their customers clarifying that they would not be closing.
He went on to say that while Honda may have benefited from retaining customers in its own network, he failed to “form a definitive position on the issue.”
Judge Moshinsky also rejected the ACCC's claims that further emails, statements on Honda's website and one call center communication also breached consumer law.
Honda and the ACCC were ordered to respond to the court within two days about agreeing costs, or appear again on Monday for a hearing on the compensation to be paid by Honda.