Unit pricing is a tool that allows consumers to easily compare costs between grocery products. Unit prices are based on a common measurement such as volume or weight.
The Trade Practices (Industry Codes – Unit Pricing) Regulations 2009 were introduced as part of the commitment to a mandatory unit pricing scheme made by the Australian Government on 5 August 2008.
The code was introduced in response to a recommendation in the Report of ACCC’s Inquiry into the competitiveness of retail prices for standard groceries. The inquiry found that significant benefits would flow if a mandatory nationally consistent unit pricing regime was introduced for standard grocery items (for both in-store price labels and print advertising).
The code makes easier for consumers to compare the price and value of similar types of products when grocery shopping.
Example 1: buying milk—at the moment, supermarkets will provide the retail price only. However, milk can be sold in various weights—1 L, 1.5 L, 2 L, 5 L etc. How are you able to easily compare 1.5 L of milk vs 5 L of milk? With the introduction of unit pricing, grocery retailers must provide unit price in addition to the retail price. The unit pricing for milk will be based on how much it costs per litre. So, the 5 L milk that sells for the retail price of $6 (unit price of $1.20 per litre) is cheaper than 1.5 L of milk at a retail price of $3 (unit price of $2).
The object of the Competition and Consumer Act 2010 (formerly the Trade Practices Act 1974) (the Act) is to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection.
The Act provides for industry codes, in particular, the Act allows for regulations to be made prescribing an industry code and declaring the industry code to be a mandatory or a voluntary industry code. A corporation must not, in trade or commerce, contravene an applicable industry code.
The Unit Pricing Code is the first consumer-related mandatory code prescribed under the Act. The purpose of the proposed code is to require grocery retailers to use unit pricing when selling grocery items to consumers so that consumers are able to make informed decisions.
Unit pricing is mandatory for store-based grocery retailers, all online grocery retailers and all other grocery retailers who voluntarily enter the scheme (called ‘participating grocery retailers’).
Store-based grocery retailers are those that sell the minimum range of food-based grocery items, have floor space greater than 1000 square metres dedicated to the display of grocery items and whose retail premises are used primarily for the sale of food-based grocery items.
Online retailers are those that sell the minimum range of food-based grocery items online.
Participating grocery retailers are those that sell the minimum range of food-based groceries and that voluntarily ‘opt-in’ to unit pricing by introducing in-store unit pricing for one or more grocery items that would be required to be unit-priced under the code.
A grocery retailer sells the minimum range of food-based grocery items if the grocery retailer sells food-based grocery items from all of the following grocery categories:
Bread
Breakfast cereal
Butter
Eggs
Flour
Fresh fruit and vegetables
Fresh milk
Meat
Rice
Sugar
Packaged food, other than food mentioned in (a) to (j)
Grocery retailers must display unit prices for all non-exempt grocery items where selling prices are displayed on in-store labels, print advertising and websites.
Unit pricing is not required for the following grocery categories:
books, magazines and stationery
optical discs and magnetic storage devices used for computing, sound reproduction or video, whether they are pre-loaded with content
photography items and equipment
electrical items (other than batteries and light bulbs)
garden tools, and items for garden or pool maintenance or decoration
flowers (including fresh, dried and imitation flowers)
furniture
hardware items
manchester
computer equipment
audio-visual equipment
telecommunications items or equipment
items for motor vehicle maintenance or repair
sports and camping equipment
toys
household appliances and kitchen and bathroom utensils
clothing, jewellery and other fashion items (other than make-up)
services, and goods supplied as part of providing a service, including mobile phone recharges
goods for hire
cigarettes and other tobacco products, including nicotine replacement products
alcoholic beverages
haberdashery
items sold from vending machines
meals prepared at the retail premises for immediate consumption
The code also exempts a retailer from displaying unit prices in certain circumstances. Grocery items that are:
marked down because the packaging is damaged, perishable and/or discontinued
different, bundled and sold together (e.g. a soup kit consisting of carrots, potatoes, onions, split peas and stock)
different and displayed with a single unit price (e.g. a range of related grocery items—such as confectionery—may be sold at a single price, but each item may be a different weight or other measure.
However, items that are simply on special would still be required to display a unit price.
Display of unit prices
Grocery retailers must display unit prices for all non-exempt grocery items where selling prices are displayed on in-store labels, print advertising and websites. The unit price for a grocery item must be:
Prominent – that is, it must stand out so that it is easily seen
In close proximity to the selling price for the grocery item
Legible – it must not be difficult to read
Unambiguous – the information must be accurate and its meaning must be clear
The unit price must be displayed in dollars and whole cents.
Advertising
The code requires grocery retailers covered by the code to display unit pricing in their print media and online advertisements. This requirement does not apply to advertisements on television, radio or other similar media.
The display of a unit price in advertising material must also comply with the requirements of the code—that is, be legible, unambiguous, prominent, in close proximity to the selling price and in accordance with the established units of measurement.
Standard units of measure
Unit prices are based on the most appropriate unit of measurement, which is usually found on the grocery item's packaging.
Some items can be displayed in alternative units of measurement. However, generally speaking, unit pricing is based on the standard units of measure:
volume (per 100 millilitres)
weight (per 100 grams)
length (per metre)
area (per square metre)
supplied by number of 40 or fewer items (per item)
supplied by number of 41 or more items (per 100 items).
If more than one unit of measurement is displayed on the grocery item’s packaging, the unit price is based on the unit of measurement the item is most often supplied in.
Do I have to display a unit price for promotions where different items are sold for a single price?
No, under the code, one of the situations where unit pricing is exempt occurs in offers where promotions of different items are sold at a single price, pursuant to clause 6(3).
The example provided in the ACCC’s publication Unit pricing: a guide for grocery retailersincludes an offer where any one of a range of chocolate bars of different kinds and weights for $1.50. In this example, you are exempt from displaying a unit price.
Do I have to display a unit price for a bundle of different grocery items?
No, under the code, one of the situations where unit pricing is exempt occurs when a bundle of different grocery items is offered for a single price, pursuant to clause 7(1)(b) of the code.
The example provided in the ACCC’s publication Unit pricing: a guide for grocery retailersincludes an offer where you can buy a packet of frozen potato chips and a separate packet of frozen fish fillets together for a single price, which would constitute a bundled grocery pack so the retailer doesn't need to display a unit price where the representation about the bundle’s price is made.
The code does not contain a definition of ‘different grocery item’ in relation to clause 7(1)(b). However, we have released guidance to assist you in determining whether you are offering bundled grocery offers. To find out more information, refer to applications and key parts of the unit pricing code page.
It is noted that when unit prices are multiplied, it may not exactly match the advertised selling price because of the practice of rounding up/down of unit prices.
Under the code, unit prices are to be worked out to the nearest cent, with half cents rounded upwards, pursuant to clause 8(5).
For example, if you calculate the unit price for a can of soup at $0.515 per 100 g (without rounding), the unit price must be displayed as $0.52 per 100 g as illustrated on page 17 of the Unit pricing: guide for grocery retailers.
What are the penalties for a breach of the Unit Pricing Code?
If you fail to comply with the Unit Pricing Code, you are in breach of the Act.
The ACCC can institute legal proceedings against you if you breach the Unit Pricing Code and/or the Act. The Act also makes provision for other affected parties to take private legal action for a breach of the Unit Pricing Code and or the Act.
Where the Unit Pricing Code or the Act have been breached, a number of sanctions and orders are available including:
Injunctive relief.
Orders for corrective advertising and notices.
Community service orders.
Declarations made by the Federal Court that a trader had engaged in conduct in contravention of the Act.
The ACCC may also accept administrative undertakings from retailers to address conduct that has raised concern about their compliance with the Unit Pricing Code or the Act more broadly.
If retailers breach certain consumer protection provisions of the Act, such as the prohibition on false and misleading representations, as distinct from failing to comply with the code, the Act provides for penalties as well as sanctions referred to above. A breach of the criminal consumer protection provisions may attract a maximum fine of up to $1.1 million for companies and $220 000 for individuals.
Download a copy of the ACCC's guidance materials Unit pricing: a guide for grocery retailers or Unit pricing: a quick guide, or review the Unit Pricing Code Regulations for more detailed information on the requirements of the code. You can also call the ACCC’s Unit Pricing Hotline on 1300 746 245 assistance.
