Carbon price claims - An overview for small business - transcript

Hi, I’m Dr Michael Schaper, the Deputy Chair of the Australian Competition and Consumer Commission.

As you’re probably aware, a carbon price is effective in Australia from 1 July 2012.

While some businesses will have to purchase carbon credits, others may be affected as suppliers pass on the extra costs. In either case, businesses can choose to increase their prices.

But, if your business is going to make a claim about price movements, you need to bear in mind some important considerations.

Now, before I explain a bit more about the ACCC’s role, there are two key points that I want you to remember:

• Firstly, it’s business as usual. You may increase your prices as you see fit; and
• Secondly, any claim you make must be truthful and must have a reasonable basis.

The ACCC’s role in looking at carbon price claims includes:

• First of all, educating businesses about their responsibilities under the Competition and Consumer Act;
• Secondly, raising awareness amongst consumers about their rights under the Australian Consumer Law; and
• Finally, investigating and taking action against businesses that breach the law.

However, our role doesn’t include formally monitoring, setting or restricting prices. We can’t stop businesses from putting up prices. But we can act if a business makes a false or misleading claim about a carbon price rise.

The ACCC has a variety of materials to help businesses understand their rights and obligations. These are available on our website or by calling the small business helpline.

So, what is a carbon price claim?

Well, your business might – for example – talk with your customers, suppliers and other businesses about the impact of the carbon price in advertising and promotional material, on product labels and in sales pitches or in contracts.

Under the Australian Consumer Law, businesses must not make false, misleading or deceptive claims. This includes comments about the impact of the carbon price. For example, we would be concerned if:

• Your price list links all price increases to the carbon price - when this is not the case; or
• Your sales representatives make comments that are not truthful.

As you try to work out the impact on your business, you might be tempted to compare your experiences with your competitors.

Now, the Act contains a number of rules relating to anti-competitive conduct and it’s important to remember these before you engage with competitors when you’re setting your prices.

Remember:

• Firstly, you must determine your costs independently, considering the circumstances of your own particular business;
• Secondly, you should avoid discussions and agreements with competitors about the carbon price; and
• Finally, you should ensure that estimated prices reflect your own business’ costs and needs, rather than anyone else’s.

Before making a claim, there’s a range of information you should consider, including information from your suppliers. However, before you use this information as the basis for your claim, you need to assess whether it’s reasonable to rely on it.

Ask yourself some questions:

• What has my supplier told me? Have they given me any data about the impact of the carbon price on their costs? Has anything else - unrelated to the carbon price scheme - caused the costs to increase?
• Are the price increases consistent with predictions made by other sources - such as the government or my industry association?
• What do contracts with my suppliers say about price increases?
• And finally, you should ask yourself about the impact of any rebates or assistance available to you or your suppliers.

So, what type of information should you consider before making a claim?

Most importantly, you’ll need to have a reasonable basis for the claim - otherwise you might find yourself in hot water.

You need to be confident that any price increase you tell your customers about, really does apply to your own business. This can include claims about percentage price increases, and increases within a price range.

It may not be practical - or indeed possible - in all cases to separate out an exact increase in cost due to a particular factor. In these circumstances, you’ll need to carefully consider whether to make a claim in the first place.

Sometimes you might also have doubts about what other firms are saying. So, what can you do if you think you’ve been misled by another business or want further information?

If you’re concerned about claims your suppliers or other businesses are making about the impact of the carbon price, contact the ACCC. We can act against businesses that make false or misleading claims.

If you have a complaint or inquiry, or would like further information on any of the topics discussed in this video, contact the ACCC Small Business Helpline, our Infocentre or use our online forms.

Alternatively, you can keep watching these ACCC carbon price videos for a more detailed look at some of the issues.

And, you can find out more about the carbon price, including how it works and any compensation you may be eligible for, at the Clean Energy Future website.