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Implementation of Changes
Section 52 of the Trade Practices Act
Section 53(C) of The Act
Exceptions
Breaches
TRADE PRACTICES ACT AMENDMENTS TO PRICING IN ADVERTISING
The Trade Practices (Amendment Clarity in Pricing) Act 2008 (‘CIPA’) was passed by Federal Parliament on 25 November 2008 and came into operation on 25 May 2009. CIPA will further regulate the way that businesses can advertise the prices of their goods and services.
CIPA has prompted an amendment to s.53(C) of the Trade Practices Act 1974 (Cth) (‘the Act’) which will require Motor Vehicle Manufacturers and Motor Vehicle Dealers (‘the Motor Vehicle Industry) to advertise vehicles with one single price that is inclusive of all on road costs such as registration, stamp duty, dealer delivery charges etc – such that consumers will know an “all up” figure price.
IMPLEMENTATION OF CHANGES
The Motor Vehicle Industry should be aware that the Australian Competition and Consumer Commission (ACCC) is responsible for the enforcement of the Act and has the power to investigate and prosecute breaches of same.
The ACCC concedes that there is still some confusion surrounding the implementation of the amendments to s.53(C) of the Act, a fact which will afford a “lead time” for the implementation and compliance with changes to the Act. This said, those within the Motor Vehicle Industry who fail to adhere to the implementation and compliance with s.53(C) of the Act should be advised that the ACCC’s tolerance for such failures will inevitably diminish.
SECTION 52 OF THE TRADE PRACTICES ACT
In addition to the amendments to s.53(C) of the Act it is also apparent that the ACCC now proposes to more vigorously police s.52 of the Act with respect to advertising campaigns carried out by the Motor Vehicle Industry.
Section 52 of the Act is a provision that prohibits corporations from engaging in misleading and deceptive conduct. This means that advertising emanating from the Motor Vehicle Industry must now be completely transparent and accurate.
A “real world example” is that motor vehicle manufacturers and dealers cannot engage in “bait advertising”, meaning:
- The model of car being advertised must be the car being sold.
- The car must not be an overseas model, or have options (which are to be paid for) on it such as metallic paint, mag wheels etc
SECTION 53(C) OF THE ACT
The new version of s.53(C) of the Act requires that the Motor Vehicle Industry must not make representations with respect to an amount that, if paid, would constitute a part of the consideration for the supply of goods or services unless there is also specified, in a prominent way, a single price for the goods and services supplied.
‘In a prominent way’
Is defined as ‘at least as prominent as the most prominent of the parts’ of the price – In other words the new s.53(C) does not prohibit component pricing, but it does require that a single figure price must also be specified at least as prominently as the component prices.
By way of an example the use of asterisks will no longer be permitted because use of an asterisk will mean that the single price will not be as prominent as the component prices, if the single price is located at the bottom of the advertisement.
‘Single price’
A single price should be the total amount that the consumer has to pay to the dealer in order to obtain the good or service advertised. A single price includes all mandatory payments such as, dealer delivery charges, administration fees, stamp duty, compulsory third party insurance and registration.
Additional charges that the consumer can pay directly to a 3rd party, such as registration fees, stamp duty and 3rd party compulsory insurance, do not have to be included in the price of the good or service.
EXCEPTIONS
It should be noted that motor vehicle manufacturers and dealers are not obliged to provide a single price to a corporation or a body corporate. The above said it must be noted that representations made to unincorporated businesses such as sole traders and partnerships are not exempted by the amendments to s.53(C) of the Act.
BREACHES
The ACCC will be able it seek a range of civil remedies for a breach of the new s.53(C) including injunctions, declarations, compensation, corrective advertising and non-punitive orders. In addition, fines of up to $1.1 million may be imposed upon businesses and $220,000.00 for individuals that fail to comply with the changes to the Act. Further it is noted that the Clarity in Pricing Act also makes it a criminal offence to fail to represent a single price.
In light of the fast approaching enactment date for the amended s.53(C) It is strongly recommended that all the marketing for the consumer goods and services of a business be subject to a pricing structure review to ensure compliance with this new law.
If you have any questions in relation to the impact of the recent amendments to the Trade Practices Act 1974 (Cth) on your business, please do not hesitate to contact Paul Quinn of this office on 4862 2020.
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