Don’t use “buy now and beat the carbon tax” marketing offers: ACCC

The competition regulator has warned businesses against advertising for customers to buy now to avoid the impact of the carbon tax and reiterated that businesses need to be confident in their claims that the tax is responsible for any price rise.

“If you intend to make claims about the impact of a carbon price prior to July 1, 2012, you need to be careful that you do not wrongly suggest that a carbon price will affect the price of your goods or services before that date,” the Australian Competition and Consumer Commission says, releasing a carbon price claims guide for business this morning.

It says while advertising campaigns urging customers to buy before the tax is introduced may “be legitimate in many circumstances”, businesses need to be careful they do not overstate savings to be made in beating the July 2012 introduction.

“If your business prices will not increase by much at all due to a carbon price you should be very cautious about making these types of claims,” the ACCC says.

The ACCC says that carbon price-related claims might be justified in the following situations:

• During negotiations for contracts that include the provision of goods and services after July 1, 2012. For instance, this may apply in the construction industry or where there are significant lead times for the delivery of particular goods and services.
• When businesses announce future price increases which will include any period after July 1, 2012 – so long as they do not suggest that a carbon price will affect prices before that date.

Following revelations that alcohol stores and taxi drivers are among businesses to have tried to use the carbon tax as an excuse for price hikes, the ACCC says if a business is claiming a price rise is the result of the carbon tax, it must have the evidence to back it up.

When determining the relevant impact of the carbon tax, the ACCC says business should consult:

• their electricity or gas bills,
• invoices from their suppliers,
• statements made by their suppliers about their prices and the carbon tax,
• business calculators,
• and industry associations and Government.

In a speech this morning, ACCC chairman Rod Sims said he anticipated that “some businesses will be faced with price rises from their suppliers, and the suppliers might say that the price increase they are imposing is fully or partly due to carbon pricing.”

“Say a business plans to pass that increase on to its own customers and claims that it is because of the carbon price. If the business is not confident about the claim that is being made by the supplier, we would expect the business to check, and seek further information, as they would in all their circumstances.”

“In any explicit representation to consumers the business needs to satisfy itself that the increase is due to carbon pricing.”

The ACCC has been allocated $12.8 million to police price gouging under the tax, with penalties as high as $1.1 million for misleading or deceptive claims. Businesses are also at risk of $66,000 infringement notices and being ordered to issue correction notices.

Prices are tipped to rise by an average 0.7% under the carbon tax, with electricity prices rising by 10%. The tax is accompanied by tax breaks and rises in Government payments; the Government says nine out of 10 households will receive assistance, with seven out of 10 fully compensated for price rises.

The price, starting at $23 per tonne, will rise to $24.15 in July 2013, and $25.40 the year after, before changing into an emissions trading scheme with a flexible price.