The Commonwealth Government is proposing to amend the Competition and Consumer Act 2010 and Competition and Consumer Regulations 2010 to exclude restaurant and café surcharges from the single pricing requirement in the Australian Consumer Law (ACL).

The single pricing requirement, under section 48 of the ACL, requires that businesses prominently display a single-figure price that must be paid for goods and services. This requirement was introduced in 2009 in response to concerns that businesses were misleading consumers by advertising ‘cheap prices’ that only reflected a component of the total price for goods and services, only to ultimately inflate the final bill with taxes, fees and charges. Particular industries that were criticised for such practices were the motor vehicle, airline and rental car industries. The single pricing requirement was introduced to ensure that consumers were made aware, at the outset, of the total price of goods and services.

However, the Productivity Commission, in its 2010 Annual Review of Regulatory Burdens on Business, reported that the single pricing requirement imposed costs and complexity on restaurants and cafés that were not commensurate with the benefits of single pricing for consumers.

Restaurants and cafés, which levy a surcharge for Sundays and/or public holidays, are required under the single pricing requirement to specify a total price, including the surcharge, for each item on the menu. Previously, businesses could simply indicate that there was a percentage surcharge on Sundays and/or public holidays. KWM has previously reported on infringement notices issued by the ACCC in response to breaches of the single pricing requirement, which have resulted in some significant penalties for restaurants.

The Productivity Commission reported that restaurants and cafés incurred costs as a result of having to provide different menus on Sundays and/or public holidays or to show different lists of prices on the same menu. Although recognising the benefit to consumers of incorporating the surcharge into a single price for each menu item, the Commission noted that consumers were ‘generally accustomed’ to dealing with component pricing in their transactions with restaurants and cafés, as the final price they must pay reflects how many items on the menu they have ordered and applicable supplementary charges, such as corkage. Hence, the single pricing requirement did not provide consumers with any ‘significant additional benefit’.

Hence, the Commission recommended that restaurant and café surcharges for specific days be removed from the scope of the single pricing provisions, particularly because such surcharges were not the original focus of the single pricing requirement. The Commonwealth Government’s proposed legislative amendment is a response to this recommendation.