31/07/2012

The long arm of the law, in the form of the Competition & Consumer Act and the ACCC, has already found an important role in relation to the Commonwealth’s new Carbon Price legislation.

Under that legislation, a carbon price commenced in Australia on 1 July 2012. The carbon price applies to certain greenhouse emissions, with some large businesses being required to purchase carbon credits against their emissions.

The often-quoted former section 52 of the Trade Practices Act (now section 18(1) in Schedule 2 of the Australian Consumer Law of the Competition & Consumer Act 2010) provides that "a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive." This section has already proven a focal point for activity in connection with the Carbon Price.

One case which has recently received a deal of unwanted publicity involved Brumby’s Bakeries Pty Ltd. The managing director of Brumby’s distributed a newsletter to about 250 Brumby’s franchisees throughout Australia stating that:

"we are doing an RRP (recommended retail price) 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 take the blame, after all your costs will be going up due to it". 

The attitude of the ACCC to that statement was that if businesses tell customers that prices have gone up due to the carbon price, as was implied here, those statements must have a reasonable basis and must be truthful.

A business can only make a statement that price increases were caused by the Carbon Price if that is in fact correct. In this case, it appeared that the Carbon Price was to be blamed when the causes of price increases were other factors, or at the time were not even known.

The owner of Brumby’s had co-operated with the ACCC and taken a number of positive steps to correct the wrong impression and minimise the adverse impact of the misleading statement. These steps included:

• writing to franchisees and outlining their legal obligations in relation to price of goods after the introduction of the carbon price
• developing training for staff in this area
• giving an undertaking that Brumby’s and other related parties would not engage in similar conduct in the future.
  

We are experienced in dealing with issues arising in connection with misleading or deceptive statements or representations. They are very easy to make and may be completely unintentional. We can help you to ensure your company doesn’t make misleading or deceptive statements or representations in any area, including regarding the Carbon Price.

If you have any questions in relation to this article, please contact TOWNSENDS BUSINESS & CORPORATE LAWYERS on (02) 8296 6222.