New national pricing laws commence operation on 25 May
Under the new laws, whenever part of a price (a component
price) payable for a consumer product or service is advertised by a
corporation, the total price payable for that product or service
must also be prominently advertised.
The total price needs to be disclosed if it is quantifiable at
the time and must incorporate any charges, taxes (including GST) or
fees payable by the consumer.
New component pricing laws enacted in the Trade Practices
Amendment (Clarity in Pricing) Act 2008 (the Act) will
commence on 25 May 2009.
If a corporation identifies in an advertisement part of the
total price (a component price) payable by a consumer for a product
or service, and the total price is quantifiable at that time, the
corporation must also prominently specify the total price in the
advertisement. The intention of the Act is to ensure that all
consumers can be certain of the total price they have to pay for
goods and services, before they enter into the transaction.
For example, under the new pricing laws:
an advertisement for a product will be in breach of the Act if
it only states that the product can be purchased for "3
payments of A$29.95, plus delivery, plus credit card
if a corporation advertises a particular cable television
service package and company-specific connection equipment is part
of that service, the corporation is likely to be in breach of the
Act if it does not state the total price payable for the service
where GST is payable for the goods or services to be supplied,
the total price (inclusive of GST) must be specified as prominently
as the GST-exclusive price, such as "A$299 + A$29.90 GST for a
total price of A$328.90."
The Act does not apply to:
price representations about goods or services not of the kind
ordinarily acquired for personal, domestic or household use or
price representations made exclusively to a body corporate
price representations about financial services, which will
continue be regulated by section 12DD of the Australian
Securities and Investments Act 2001.
Breach of the new pricing laws may attract civil proceedings by
the Australian Competition & Consumer Commission (ACCC) or
criminal prosecution by the Director of Public Prosecutions
resulting in fines of up to A$1.1 million for companies and A$220,
000 for individuals, per offence.
All Australian corporations who supply consumer type goods or
services should immediately review how they price those goods or
services to ensure compliance with the new pricing laws.
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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Two recent cases - by competition authorities in China and in South Africa -.are interventions against excessive pricing.
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