The Australian Competition and Consumer Commission
("ACCC") has released an information guide, News for
business – Component price advertising, to explain
the application of the Trade Practices Amendment (Clarity in
Pricing) Act 2008 (Cth) ("Clarity in Pricing Act")
In addition to the general guide, the ACCC has launched a
"Component pricing" page on its website (http://www.accc.gov.au) and has issued
industry-specific guides for the motor vehicle industry, the travel
industry and a guide for electrical goods, whitegoods and furniture
In the current edition of the Hunt & Hunt Commercial Update,
we explain in detail how the Clarity in Pricing Act will apply. In
short, from 25 May 2009, corporations will be required to specify,
in a prominent way and as a single figure, the single price for
goods or services that they are supplying or promoting to
The Clarity in Pricing Act
The Clarity in Pricing Act repeals the existing section 53C of
the Trade Practices Act 1974 (Cth) ("Trade Practices
Act") and substitutes a new section 53C into the Trade
Practices Act. The purpose of the amendments is to prevent
businesses from misleading consumers through the use of component
pricing, which is the practice of pricing goods and services as the
sum of multiple parts. For example, motor vehicle dealers will no
longer be permitted to advertise a car as $19,990 plus on-road
If you are supplying or promoting goods or services to
consumers, you must specify a single price which must include:
charges of any description payable by the consumer (excluding
optional charges); and
any tax, duty, fee, levy or charge in relation to the supply;
but is not required to include:
optional charges, for example, a credit card surcharge will not
need to be included in the single price where there are alternative
payment options but must be included in the single price where
there is no other method for payment; and
charges that are payable in relation to sending the goods to
the consumer (e.g. postage, courier fees), however, where such
charges must be paid by a consumer and the amount of these charges
is known, you must disclose the minimum of those charges as a
separate component of price (e.g. $55 plus $20 freight).
The ACCC has confirmed that the prohibition does not apply to
representations made exclusively to businesses. However, as we
noted in our Commercial Update, you might find that your company
inadvertently promotes its goods or services to consumers. You may
not have any control over who looks at a price list on your
The Trade Practices Act will require the single price to be
"at least as prominent" as the most prominently displayed
component of the price. The ACCC has said that a
"prominent" price is one that stands out to a consumer,
is clear, eye-catching and noticeable. The ACCC has echoed our
recommendation that, among other things, the size, colour and type
of font are important considerations in this context.
The ACCC has noted that the single price means the minimum total
cost able to be quantified at the time of making the price
representation and an amount is quantifiable if it can be readily
converted into a dollar amount. Furthermore, if a charge is subject
to variation then you must calculate it based on best available
information and clearly advise the consumer that it may be subject
This means that where a total price is not quantifiable but a
minimum total price is known you must disclose the minimum price as
a single figure and advise the consumer that not all components are
included in the minimum price.
What you need to do?
Read our Commercial Update and visit the ACCC website for
further information on the changes to the Trade Practices Act.
Consider whether you are supplying or promoting your goods and
services to consumers.
When you make a price representation to consumers, remember to
include all taxes, duties, fees, levies or charges that can be
calculated at that time and if you are unable to quantify a
component of the price, clearly advise consumers that the component
is not included in the single price.
Ensure that the single price is displayed at least as
prominently as any component prices.
Review your price lists, advertisements, quotes, invoices and
any other documents which display your prices and seek our advice
if you are unsure whether your materials are compliant with the
Trade Practices 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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