CLIMATE SPECTATOR: False carbon claims on the agenda

The ACCC has been happy with the low number of complaints of carbon price gouging, but given the reputational damage that can result, companies must be wary of complacency.

Climate Spectator

The Australian Competition and Consumer Commission has recently announced that the instances of complaints about price gouging on the back of the carbon price are relatively low, less than 10 per cent of the overall complaints it has received since July 1, when the carbon price came into force. The majority of carbon price complaints have been in relation to the actions of small business and the effect of electricity price increases.

This is good news, however companies (especially smaller enterprises) should not become complacent about the dangers of making unsubstantiated carbon price claims. Events of the last few weeks have shown that when companies get it wrong, it can result in a number of damaging consequences.

Brumby's is a perfect example of this. When the managing director of Brumby's sent out an internal memo to franchisees encouraging them to increase their prices and "let the carbon tax take the blame" a furore erupted. This led to a wave of negative publicity, the managing director resigning his position and Brumby's parent company, Retail Food Group, apologising to shareholders for the "foolish and ill-considered" memo and acknowledging it needed to win back the trust of its customers.

The ACCC has accepted an enforceable undertaking that neither Retail Food Group nor its subsidiaries, including Brumby's, will engage in this type of conduct in the future.

Although the ACCC seems to be pleased about the low level of complaints it has received so far, it has still been active in monitoring and policing this area. It must be remembered that the Australian government has given the ACCC an extra $12.8 million to monitor carbon price increases.

Just five days after the commencement of the carbon price, the ACCC accepted informal undertakings from two solar panel suppliers, Polaris Solar Pty Ltd and ACT Renewable Energy Pty Ltd, for claims they made in flyers that electricity prices would increase by 20 per cent with the introduction of the carbon price and that by 2019 electricity prices would increase by 400 per cent.

These recent examples show that companies need to be vigilant about making sure that any carbon price claim they make can be substantiated because legal action is not the only serious consequence that can flow from making misleading carbon price claims. Reputation and brand damage can be caused overnight, but takes much longer to correct. 

Authored by Peter Keel, Partner, Norman Lucas, Partner and Erin Hourigan, Associate, Maddocks.

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