The Australian Competition and Consumer Commission has launched a guide for businesses on carbon price practices, urging them to ensure their claims are accurate and can be substantiated.
Speaking in WA today, ACCC chairman Rod Sims said if a business chooses to raise its prices and attributes the increase to carbon pricing, it must ensure such claims are indeed true.
Sims reiterated the point that businesses can raise or lower their prices at any time, regardless of the tax, which comes into effect on July 1, 2012.
But according to the ACCC, it is misleading conduct to say a price increase is due to carbon pricing, or even partly due to it, when that isn’t the case.
“The logic of our role is clear. If a business increases its prices today, consumers will push back,” Sims said at an event hosted by the WA Chamber of Commerce and Industry.
“If a business increases its prices on July 1, 2012, we do not want consumers… accepting this increase in the mistaken belief that the price increase is due to carbon pricing and so will be the same from any supplier.”
According to Sims, it is inevitable that some businesses will be faced with price rises from their suppliers. But if they are not confident about the claim being made by a supplier, they should seek further information.
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“In any explicit representation to consumers, the business needs to satisfy itself that the increase is due to carbon pricing,” Sims said.
“Say I’m running a hair salon. I put up a price list that says from July 1, all services are subject to a 10% increase that is largely due to the carbon price.”
“A month earlier, the salon received a statement from the electricity supplier saying there would be a new tariff from July 1.”
“The salon’s energy use was such that the electricity price is equal to roughly 2% of the retail price of a hair style. The claim by the salon that styles are increasing by 10% – and that is largely due to the carbon price – is misleading.”
With regard to this example, Sims says it’s not the clear the power company has raised prices only because of pricing. Even if it has, 10% is a lot more than 2%.
“The law also applies to oral presentations – what staff or owners say to customers,” Sims said.
“A café staff member telling customers ‘All the prices on our menu have increased because of the carbon price’ is prima facie misleading if there is no factual basis for the claim.”
In a nutshell, every business must ensure its claims:
- Are truthful and accurate.
- Do not mislead consumers, whether individuals or other businesses.
- Can be substantiated.
- Are based on reasonable grounds if they contain a prediction about price increases connected to the impact of a carbon price.
“These are not new requirements – if you make a claim, you need to ensure it is right. If in doubt, don’t make the claim,” the ACCC says.