The rising cost of utilities, other business expenses and the
introduction of unpopular taxes is no excuse for businesses to
incorrectly point the finger to these expenses as the reason for
increasing product prices. In recent times, there have been
examples of businesses doing just this and they have had to bear
the wrath of the public, media and the consumer watchdog.
Brumby Bakeries decided to increase their prices and sent out an
internal newsletter to franchisees advising them to put up their
prices and "let the carbon tax take the blame".
In a copy of the June 2012 edition of the newsletter, the former
managing director of Brumby Bakeries Deane Priest said:
"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 [sic] take the
blame, after all your costs will be going up due to
The comments in the newsletter instigated an investigation by
the ACCC. At the time, the ACCC said it "would be concerned if
any franchisor encouraged or induced its franchisees to make
misleading price claims about the impact of the carbon
As a result of the ACCC's investigation and the public
condemnation, Retail Food Group, owner of Brumby Bakeries took a
number of prompt actions to redress any impact of the newsletter.
This included writing to franchisees and outlining their legal
obligations associated with price representations and the effect of
the carbon tax and developing training for staff and franchisees
regarding their legal obligations.
Retail Food Group cooperated with the ACCC and offered a court
enforceable undertaking that neither Retail Food Group nor its
subsidiaries, including Brumby Bakeries will engage in similar
conduct in the future.
Genesis Fitness Club
GFC Berwick Pty Ltd trading as Genesis Fitness Club
("Genesis") intended to increase its membership fees
between 9% to 15% blaming the carbon tax. In April 2012 Genesis
sent a letter to 2,122 of its members promoting a 'RATE
FREEZE' offer, offering members a range of lengthy contract
extensions at current or reduced membership rates so they could
avoid having to pay the increased fees.
The ACCC was of the view that Genesis "did not have a
reasonable basis" to claim that the carbon tax would increase
the cost of gym memberships and were concerned that the false
claims "may have encouraged" people to sign up for
lengthy contract extensions they otherwise would not have
As part of the resolution of this matter, all affected members
were written to by Genesis Fitness Club offering them the
opportunity to withdraw from the contract extensions at no
Genesis also had to pay $6,600 as a result of an infringement
notice issued by the ACCC.
These cases are a reminder that all businesses must not:
mislead or deceive consumers when advertising and selling goods
or services; and
incorrectly claim the increase in the sale price is the result
of other factors when in fact it isn't.
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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