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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.
Conclusion
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.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Readers will remember that last year we reported on the decision in Australian Competition and Consumer Commission v Nuera Health Pty Ltd (In Liquidation) [2007] FCA 695, where the Federal Court found the defendants to have engaged in reprehensible conduct in falsely promoting a treatment to cancer patients.
