The Government announced on 13 July 2011 that it would provide $12.8 million in additional funding to the Australian Competition and Consumer Commission (ACCC) to enable the ACCC to investigate and prosecute businesses that make misleading claims about the impact of the carbon tax on prices.

In a press conference in Melbourne Treasurer Wayne Swan said that "the commission will keep a watchful eye out for any shonky attempts to jack up prices and falsely claim it is related to the carbon price.....the ACCC will be the cop on the beat out there to ensure false claims are dealt with, and dealt with the full force of the law."

The Treasurer indicated that the Government will direct the ACCC to give the highest priority to:

  • investigating and taking action against any business that makes false or misleading representations about the impact of the carbon price on the price they charge consumers;
  • educating businesses on their obligations to not make false or misleading statements to consumers about the impact of the carbon price on the price they charge consumers;
  • raising awareness amongst consumers by informing them that businesses are prohibited from making false statements about the impact of putting a price on pollution.  

The Government's plan envisages that the ACCC will use existing powers under the Australian Consumer Law (ACL) to investigate and take action against any company or individual which raise its prices and falsely claims that the price increase is as a result of the carbon tax. There is no indication that the Government intends to legislate to grant the ACCC any additional powers as was the case when the GST was first introduced.

Section 29 of the ACL prohibits the making of false or misleading representations in connection with the supply of goods or services. This provision replicates section 53 of the Trade Practices Act 1974 (Cth) (TPA) which was repealed and replaced by Section 29 of the ACL on 1 January 2011, when the TPA was renamed the Competition and Consumer Act 2010 (CCA). The ACL, which also commenced on 1 January 2011, is contained in Schedule 2 of the CCA.

Specifically in relation to price claims, section 29(1)(i) of the ACL prohibits the making of a false or misleading representation with respect to the price of goods or services. This provision replicates section 53(e) of the TPA.

Since April 2010, the ACCC has had the power to seek, and the courts the power to grant, civil pecuniary penalties for breaches of consumer protection provisions such as the making of false or misleading representations. The maximum penalty per contravention is $1.1 million for corporations and $220,000 for other persons.

In the time in which these pecuniary penalty powers have been at the disposal of the ACCC and the courts, there has been a developing trend for the ACCC to take full advantage of the powers wherever available and for the courts to impose increasingly significant penalties for consumer law contraventions.  For an overview of a number of the penalty proceedings commenced by the ACCC in the first 12 months of the operation of the new powers, click here.

As at 30 June 2011, over $3.6 million in pecuniary penalties had been awarded by the Court in consumer protection actions commenced by the ACCC and in addition to that, earlier this month, the Federal Court penalised Singtel Optus $5.26m for using misleading headlines in its broadband advertising campaigns. This represents the largest pecuniary penalty to date for a breach of the consumer protection laws. For an analysis of the Optus decision, click here.

ACCC Deputy Chairman Peter Kell announced that the ACCC will deploy 20 new staff to deal with misleading carbon price claims, undertaking tasks such as dealing with queries from the public, liaising with business to provide them with guidance about how to comply with the law, investigating and taking enforcement action in relation to  any misleading claims. Mr Kell said his organisation was ready to investigate any complaints.