ACCC warns on carbon price claims

The ACCC has issued a guide for business that outlines the claims you can, and cannot, make about the carbon tax’s impact on the prices you charge customers.

ACCC Chairman Rod Sims has made it clear the commission won’t tolerate businesses increasing prices and unfairly blaming it on the carbon tax.

“If a business raises its prices and says that the increase is a result of carbon pricing – or even partly the result of carbon pricing – it must ensure that what it says about the price increase is true,” Sims told the Western Australia Chamber of Commerce and Industry last Tuesday.

Sims offered the following example of a misleading claim:

“Say I’m running a hair salon. I put up a price list that says from 1 July all services are subject to a 10 per cent price increase that is largely due to the carbon price.

ACCC Chair
Rod Sims

“A month earlier the salon received a statement from the electricity supplier saying there would be a new tariff from 1 July. The salon’s energy use was such that the electricity price increase is equal to roughly two per cent of the retail price of a hair style.”

Because the extra cost is not 10 per cent, Sims said claims of this sort are misleading.

The ACCC has also published a Guide for business explaining the issues in greater detail.

The guide offers tips including:

  • Don’t exaggerate cost savings in your advertising if you encourage customers to buy before 1 July 2012 so as to avoid a carbon price impact, as the lower price you offer may be misleading;
  • Verbal explanations of price increases caused by the carbon tax can also be deemed misleading;
  • Make sure any claims about the carbon tax as the source of price rises are backed by strong evidence, and don’t just take an industry association’s word for it – check how increased costs from suppliers impact the cost of the goods or services you sell before making any statements about the cause of price rises.

Businesses that breach these guidelines are subject to the ACCC’s usual range of penalties for misleading conduct, including very substantial fines.

The Commission has also started a consumer education campaign on the issue, including a web site advising individuals of their rights regarding carbon pricing.

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