Carbon not the only price - businesses to pay on wrong price claims

In the heat of the controversy surrounding the commencement of the carbon tax from 1 July 2012, the ACCC has released the Carbon Price Claims – Guide for Businesses.

With the price on carbon already a hot topic in the press, it is only a matter of time before its impacts are felt by businesses. The ACCC has responded with the Guide, which is aimed at assisting businesses in understanding their obligations when making claims in relation to the impact of the tax. In particular, the Guide emphasises the need for business operators to take care in ensuring all claims:

• are truthful and accurate;
• do not mislead consumers (individuals or other businesses);
• are based on reasonable grounds; and
• can be substantiated.

The ACCC has stressed that while there is no reason why businesses cannot attribute a price increase to the carbon tax, they should be confident not only that the claim is accurate, but that it is based on reasonable and well-informed grounds.

The ACCC can issue a substantiation notice, which gives a person 21 days to provide the ACCC with information and documents in support of their claim. The ACCC will then consider whether there is a need for further investigation. If it does, businesses found to have engaged in misleading and deceptive conduct may be subject to pecuniary penalties.

Claims subject to ACCC scrutiny will include those which overstate or inflate the impact of the new laws, for example:

• claims that the whole amount of a price increase is caused by the carbon price, when in fact only part of the increase is so attributable; or
• claims attributing a price increase to the carbon price when costs have increased for unrelated reasons.

The Guide applies to representations made before and after the introduction of the tax, and draws specific attention to claims made with the commencement of the tax in mind, such as during current negotiations for contracts or in relation to announcements of future price increases.

The ACCC has indicated that priority will be given to complaints that reveal significant or widespread consumer detriment or blatant disregard for the law.

As we noted when the carbon price package was introduced into Parliament, the Government is not proposing legislative changes to combat price gouging, as happened when the GST was introduced. Without these sorts of tough measures with the carbon permit scheme, it will be unclear how effective the ACCC can be. And of course, there is nothing requiring businesses to explain any price rises they might make, apart from commercial considerations.

You might also be interested in...

• The role of ACCC and risks of "price exploitation" with the carbon price