In the lead-up to the introduction of the carbon tax on July 1, there has been considerable focus on the potential for price gouging – inflating prices beyond the cost increases reasonably attributable to the tax. In recent days, this has been fuelled by a letter sent to small business from the opposition, urging them to place flyers in their shops apologising for any carbon-tax related price increases.
What business can and cannot claim following the introduction of the carbon tax
Businesses are generally free to increase or lower their prices as they choose. In the context of the carbon tax, there are no specific laws preventing price gouging. However, the law does prohibit false or misleading claims regarding the cause of any price hike. For example, if a business reasonably estimates that its costs have increased by 5% as a result of the carbon tax then ..
Federal Treasurer Wayne Swan has announced that the government will provide the competition watchdog with almost $13 million in extra funding to tackle carbon tax-related price-gouging.
In this context, price-gouging refers to business inflating prices beyond the cost increases reasonably attributable to the tax.
The Australian Competition and Consumer Commission’s extra funding will go toward hiring a team of 20 staff dedicated to identify and investigate price-gouging.
Today marks the first day the long-awaited criminal cartel laws enter force in Australia. The news laws create new civil and criminal offences for engaging in cartel conduct. Cartel participants now risk up to 10 years jail for making or giving effect to cartel provisions, defined (in s 44ZZRD(2)!) to include price-fixing (this replaces s 45A which has been repealed), bid-rigging, restricting outputs and market division between competitors. Despite the flaws in the drafting of the laws, it is appropriate to treat cartels as criminal and the law should be welcomed.
The Trade Practices Act (TPA) is too big and too complicated. The Government has introduced phase I of their two-phase plan to implement a new Australian Consumer Law which will bulk up the Act even further (the Bill alone runs to 84 pages). The adds to the additional 90 pages of statutory text generated by the recent passage of the criminal cartel act. It cannot go on ... the annotated acts are bursting at their seems.
The Trade Practices (Australian Consumer Law) Bill 2009 was introduced into Parliament last month and contains the new unfair terms laws which, if passed, will enter into force on 1 January 2009. They are, however, considerably watered down from the original proposed unfair terms laws and the Government has provided insufficient explanation for this change.
The ARC has accepted the ranking of law journals proposed (reluctantly) by the Council of Australian Law Deans (CALD) and it’s not good news for competition law academics. Rankings are designed to ensure research is assessed based on 'quality' and not merely 'quantity', although exactly how this will work in practice remains unclear. Good quality research is to be encouraged, but quality assessment cannot be made on the basis of journal alone.
Australia will soon join the US, the UK and a number of other countries in criminalising cartel behaviour. The criminalisation of cartels is desirable. The economic damage they cause is well documented and civil penalties, no matter the size, have failed to provide adequate deterrence. But the consequences of criminalisation are serious and it is important to ‘get it right’. While it took many years for Australia to introduce criminal cartel legislation, its passage through Parliament has been rushed with the consequence that the bill that has now passed is seriously flawed and likely to lead to considerable uncertainty. The sudden urgency (grounded more in politics than good policy) was highlighted by Senator Coonan's acknowledgement that, despite the potential for the bil
On 6 May the government released a second discussion paper relating to the introduction of creeping acquisition laws in Australia. It is disappointing to say the least. A 'creeping acquistion' involves ‘the acquisition of a number of individual assets or businesses over time that may collectively raise competition concerns, but when considered in isolation, are unlikely to be captured by the existing mergers and acquisitions test under section 50 …’ (this is the definition adopted in Chris Bowen’s Press Release) and the ALP have, for many years