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ACCC Issues Carbon Tax Warning After Liquor Store Raises Prices: Legal Matters

Liquor store in hot water after carbon tax price hike

By Michelle Hammond
Wednesday, 26 October 2011

The competition watchdog says businesses could be forced to defend any price rises in response to the carbon tax, after a liquor store used the tax to justify a 20% rise in the price of beer.

 

It’s been revealed the retailer, which hasn’t been identified, told a customer that a $10 price increase for a carton of beer was the result of the carbon tax.

 

Rod Sims, chairman of the Australian Competition and Consumer Commission, said a consumer went into the store and saw a carton of beer priced at $60, normally priced at $49.95.

 

“When the customer questioned the checkout operator, the customer was told the price increase was due to the carbon tax,” Sims said.

 

Sims, who labelled the claim as “silly”, said the ACCC has sent a written warning to the retailer.

 

“It does take a little bit of electricity to make a beer but not a lot. And besides which, the carbon tax hasn’t started yet. It’s just way over the top,” Sims said.

 

Under new laws, the ACCC will be able to demand that a business prove a claim that the carbon tax has caused a price rise for its products or services.

 

If the business fails to respond within 21 days, it will automatically be hit with a $60,000 fine.

 

The ACCC received the new powers, known as substantiation notices, from the Federal Government under the Australian Consumer Law.

 

The watchdog will be able to issue the notices even when it does not have a proven “reason to believe” that a company has misled consumers.

 

“Such notices help us to determine whether further investigation is required,” Sims said.

 

While a business will not have to prove that the carbon tax caused the price rise, it will have to show it had a “reasonable basis” for making the claim.

 

If misleading and deceptive conduct is proved by the ACCC, the business will face penalties of up to $1.1 million.

 

The ACCC plans to release proposed guidelines, on how the substantiation notices will work, by mid November. It will then consult businesses in the lead-up to the carbon tax on July 1, 2012.

 

Sims said businesses are entitled to raise prices at any time. The ACCC’s focus will be on when businesses attribute those price rises to the carbon tax.

 

“Businesses have the right to increase their prices... But claiming an increase is, to one extent or another, the result of carbon pricing – when it is not – is misleading,” he said.

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