Carbon Price claims

15 November 2011 | Mark McCowan

The Australian Competition and Consumer Commission (ACCC) has released a guide for business regarding carbon price claims (ACCC guide). The ACCC Guide focuses on the ways in which businesses that make claims about the impact of the carbon price (which takes effect on 1 July 2012) can avoid making misleading or false claims in breach of the Australian Consumer Law (ACL).

The overall message of the ACCC guide is that, if a business wants to make claims about the impact of the carbon price on the prices it charges, it should carefully check that it can substantiate those claims and that any price increases are not in fact attributable to other causes. The ACCC’s guidance emphasises that the need to ensure pricing claims are accurate is not a new obligation and that there is no general requirement to justify price increases – the ACCC is only concerned with the attribution or linking of price increases to the carbon price. 

Businesses may make claims about the impact of the carbon price on their pricing in various ways, including on websites, in contracts, in advertising or promotional material, in conversations, at meetings, in correspondence, on price lists and on labels.

Businesses that make claims about the carbon price impact must be careful not to:

  • overstate the proportion of a price increase that is attributable to the carbon price;
  • attribute price increases to the carbon price when they are linked to increased costs of other inputs, such as wages and rent;
  • permit sales representatives to make misleading oral representations to customers about the impact of the carbon price;
  • exaggerate cost savings associated with purchasing before 1 July 2012; or
  • make any unsubstantiated claims or assumptions about the impact of the carbon price.

The ACCC guide makes clear that business’ claims must be based on the direct and demonstrable impact of the carbon price on their particular business. The ACCC guide suggests that businesses carefully check a number of sources before making any claims about the impact of the carbon price. Research on the likely impact of the carbon price on the individual business may consider a range of sources, including: 

  • invoices and statements by energy and gas suppliers;
  • invoices and statements by input suppliers;
  • invoices and statements by transport companies;
  • business calculators;
  • information from industry associations;
  • information from Government;
  • projections from business advisers as to the likely price impact. 

The ACCC guide recommends that businesses compare various sources of information to ensure that they are in line with each other before making a claim about the impact of the carbon price on business costs. For example, it will not be appropriate to rely on increased transport costs as a basis for claiming that the carbon price has resulted in increased prices without obtaining information from the transport company as to whether its price increases are related to the impact of the carbon pricing mechanism. The ACCC guide also points out the risk of simply repeating statements made by others as if they applied to your business.

Customers, suppliers and competitors can make complaints to the ACCC about a business’ claims regarding the carbon price. If a business makes a claim regarding the carbon price which the ACCC thinks warrants further investigation, the ACCC may give the business a written request for more information, or issue a substantiation notice requiring the business to provide proof to substantiate its claim within 21 days. The ACCC guide states that the ACCC will give priority to cases involving significant consumer detriment and cases that demonstrate a blatant disregard for the law. 

The ACCC has indicated that the guidance is likely to evolve or be supplemented over the next few months as it consults with the business community in relation to the guide and the implementation of the carbon pricing mechanism. The guide may also be extended to include sector-specific issues.

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Mark McCowan

Partner. Melbourne
+61 3 9672 3335