20 July 2012 ACCC takes early action on carbon price claims - make sure you don't make yourself a target


The carbon price commenced in Australia on 1 July 2012. As part of the new regime, the government has directed the ACCC to undertake a compliance and enforcement role in relation to claims made about the impact of the carbon price. The ACCC’s focus is to ensure businesses do not make misleading claims about price increases as a result of the carbon price. The ACCC does not have a role in formally monitoring, setting or restricting price increases linked to the carbon price and cannot prevent a business from putting up its prices as a result of the carbon price.  Since 1 July, there have been a number of examples where businesses have come under investigation for their pricing claims.  For example, on 8 June 2012, the managing director of Brumby's Bakeries distributed a newsletter to approximately 250 Brumby's franchisees which contained the following statement:

"... We are doing an RRP review at present which is projected to be in line with CPI, but take an opportunity to make some moves in June and July, let the Carbon tax take the blame, after all your costs will be going up due to it."

The ACCC considered that Brumby's carbon price statement may have had the effect of inducing or encouraging Brumby's franchisees to make representations to retail customers linking product price increases to the carbon price without reasonable basis.  In response, the ACCC accepted a Court enforceable undertaking from Brumbys on 16 July to ensure that any future statements in relation to the effect of the carbon price on Brumbys' pricing had a reasonable basis. Earlier in July, the ACCC accepted an informal undertaking from Polaris Solar Pty Ltd and ACT Renewable Energy Pty Ltd for carbon price claims regarding the impact of the carbon price on household electricity prices that the ACCC considered were likely to mislead.

To assist business, the ACCC released a guide to price claims and other representations in relation to carbon pricing.  A copy is available from the ACCC website.

Care is needed with any claims about the impact of the carbon price.  You need to consider a range of matters including:

  • How the impacts of a carbon price (including any rebates and increases up the supply chain) and the flow on price increases were calculated;
  • Whether the calculations accurately reflect the cost of the inputs of your own business;
  • Whether the price increases are consistent with the carbon price impact as predicted by other sources such as government, your industry association or other professional advisers; and
  • If there are other factors (unrelated to the impacts of a carbon price) that have contributed to the price increase.

It is clear that the ACCC is watching the market carefully, and will take action against any pricing claims or other representations in relation to the carbon price that is considers are misleading or deceptive or likely to do so. 

For more information, or any assistance with your marketing or pricing decisions around the impact of the carbon tax, please contact Swaab Attorneys.

Authored by M Hall.

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This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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