Under direction from the Australian Government, the Australian Competition and Consumer Commission (ACCC) has been tasked with the role of educating businesses and monitoring any claims made in relation to the effect of the carbon price on the cost of goods and services.
In its Carbon Price Claims – Guide for Business (Guidelines), the ACCC outlines its position on when it will consider carbon price claims as misleading or deceptive in exercising its enforcement powers under the Competition and Consumer Act 2010 (Act).
What types of claims will be unlawful?
The ACCC warns against making representations that a price increase is due to the Government’s carbon price, if businesses do not have ‘confidence’ in such a claim. The Guidelines caution that claims regarding the effects of the carbon price, like other business statements, must adhere to the Act and:
- be truthful and accurate;
- do not mislead consumers (whether individuals or other businesses);
- be based on reasonable grounds, and
- are able to be substantiated.
The ACCC will enforce the prohibition on misleading, deceptive or false claims across statements made in advertising, labels, during contract negotiations and to customers and suppliers in correspondence or on the shop floor.
It is an offence under the Act for companies to enter into any arrangement or understanding in relation to price adjustments. Under the Guidelines, the ACCC has stated that this will include price arrangements and adjustments attributable to a carbon price.
Businesses must also be wary of exaggerating the cost savings to customers if they buy before the implementation of the carbon price on 1 July 2012. The Guidelines do however provide that claims may be made in the lead up to the carbon price during contract negotiations for goods and services to be provided after 1 July, and when announcing price increases which will take effect after 1 July.
What can businesses do to assess the impact of the carbon price?
Bills, invoices, business calculators and information from industry associations and the government may all assist in calculating and substantiating carbon price claims. However, the ACCC has warned that businesses should be careful when relying on third-party information, and assess whether those sources adequately take into account other factors which might contribute to a price increase and the impact of any carbon price rebates.
What are the ACCC’s enforcement powers?
Under the Act, the ACCC may issue a substantiation notice requesting a business to provide information and documents to support its carbon price claims. Corporations must comply or seek an extension within 21 days, however individuals may choose not to respond on grounds that providing materials may incriminate them or expose them to a penalty.
Non-compliance with a substantiation notice may result in fines of up to $5,500 for individuals and $27,500 for corporations. A finding of misleading and deceptive conduct under the Act exposes individuals and corporations to penalties of $220,000 and $1.1 million respectively.
In light of the ACCC’s powers, businesses that make carbon price statements must take care to retain all documents and communications used to assess the impact of the carbon price in the event that the ACCC take action for misleading and deceptive conduct or issue a substantiation notice under the Act.
Dan Pearce, Partner
T: +61 (0)3 9321 9840
Ian Robertson, Partner
T: +61 (0)2 8083 0401
Paul Venus, Partner
T: +61 (0)7 3135 0613
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.