Businesses are starting to estimate the effect the carbon tax is having on their business, however, business owners need to consider the Competition and Consumer Act 2010 (Cwlth) before blaming the carbon tax for price increases.
Within the Act it is stated that you must not make false, misleading or deceptive claims about the price of goods or services.” This includes making false, misleading or deceptive claims by connecting price rises to the carbon tax price increase.
The Australian Competition & Consumer Commission (ACCC) has penalised a number of companies that made false claims about carbon tax increases influencing price rises within their business. You must be able to justify your claim if you intend to make similar claims.
For example, Berwick’s Genesis Fitness Club recently paid a $6,000 infringement notice after claiming the carbon price rise affected the cost of its gym memberships.
The company sent a letter to more than 2,000 of its members to inform them of a “rate freeze” offer. The letter stated that members could take advantage of lengthy extensions to their contracts at the current or reduced membership rate and it would save them from a 9-15% increase as a result of the carbon tax increase.
The ACCC stated that Genesis Fitness Club could not reasonably claim that the carbon price increase would cause membership rates to increase.
The ACCC found that more than 200 members took up the offer and that they were concerned the false claims about the carbon price may have encouraged them to extend their contracts that they otherwise may not have. It said that while businesses could set their prices as they liked, they must consider the basis for making claims about the carbon price and make sure they are truthful.
This resulted in the company that owns GFC Berwick writing to affected members and giving them to chance to withdraw from their contracts at no cost.
Before making a claim, make sure you have the necessary hard evidence, including:
- Invoices indicating the effect the carbon price has on your business input costs.
- Notices or invoices indicating the impact the carbon price has on your cost of services, such as travel costs, gas, waste disposal, electricity and waste disposal.
- Other information from the government or your industry association. This may show the likely price impacts the carbon price has on certain industries and could more accurately reflect your particular costs.
Look up the ACCC’s paper called Carbon Price Claims: Information to support your claims, as it may offer further guidance on this issue. You can find this at www.accc.gov.au/carbon.