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The crackdown comes after the Herald Sun reported in December that outlaw bikie gangs stand accused of using standover tactics in the heavy haulage towing industry, to force other operators to flee from crash scenes.
Under current laws tow trucks picking up cars can only operate in designated areas under an allocation system.
The rules were introduced by the Cain Government in the 1980s to outlaw tow truck operator turf wars.
But under a loophole in the current rules there is no allocation system for the heavy haulage industry.
Transport Minister Terry Mulder said closing this loophole in road legislation will prevent rogue operators from trying to muscle in on other operators' areas.
"By confirming that towing companies are restricted to specific areas of operation, we can crack down on standover tactics and conflicts stemming from multiple tow trucks arriving at crash scenes and causing major disruption to the travelling public," he said.
"Motorists involved in a collision will no longer be subjected to the tough guy tactic of a few rogue operators who have been giving the industry a bad name."
In December the Herald Sun reported truck drivers and industry figures have allegedly been intimidated by the Hells Angels East County Sgt-at-Arms Peter "Skitzo" Hewat, who owns a towing company and uses club members wearing colours to attend incidents.
Under the new law tow truck operators will be banned from holding onto personal property left in towed cars until their bill has been paid.
"However, they are entitled to retain the damaged vehicle until all outstanding fees have been paid," Mr Mulder said