Brumby’s sorry for ‘blame carbon tax’ memo
Major Australian food retailer, Brumby's Bakeries, has apologised after its franchisees were told to blame price rises on the newly introduced carbon price legislation.
However, it still faces an investigation by Australia's consumer watchdog.
The Australian Competition and Consumer Commission (ACCC) has been given tougher powers and can seek penalties of up to $1.1 million to ensure carbon price claims made by businesses are not misleading.
Brumby's managing director Deane Priest said in an internal newsletter that stores could raise prices in the two months around the July 1 starting date of the carbon price while a price review was underway.
"We are doing an RRP (recommended retail price) review at present which is projected to be in line with CPI (consumer price index), but take the opportunity to make some moves in June and July," Mr Priest wrote in the June edition of Backmix, an internal publication.
"Let the carbon tax take the blame, after all, your costs will be going up due to it."
The ACCC has now asked Brumby's parent company, Retail Food Group (RFG), to explain the advice.
"The ACCC would be concerned if any franchisor encouraged or induced its franchisees to make misleading price claims about the impact of the carbon price," it said in a statement after the memo was made public.
RFG chief executive Tony Alford said the comments "were not sanctioned and are of significant concern to the board" and he unreservedly apologised for the "unacceptable error of judgment".
"Following thorough investigation of the matter we are satisfied that the comments were not made in an effort to encourage our franchisee community to link price adjustment to the carbon tax," he said in a statement.
"But rather (they) were innocent, albeit foolish and ill-considered remarks when placed in the context of the internal franchisee communication."
Mr Alford said as a consequence of the carbon price "there will be further margin and cost pressures on our franchisee community".
"However, it was inappropriate to link this matter with the imminent RRP increase (from July 16)."
The company is writing to all franchisees about the "limited relevance" of the carbon price to retail prices.
The ACCC said its inquiries were continuing.
The minority Labor government's Assistant Treasurer, David Bradbury, described Mr Priest's advice as "reprehensible" and said businesses need to be careful about how they communicated price movements.
"Don't jack up your prices and falsely blame the carbon price," he said in Sydney.
The conservative Liberal-National Opposition Leader Tony Abbott said every business was under pressure because of the carbon price.
"There can be no rip-offs and the ACCC is right to police any business that is threatening to rip off its customers," he said in Adelaide.
"But I can fully understand why every single business in this country is looking at its costs and thinking of how much prices have got to go up."
Meanwhile, The Labor Prime Minister Julia Gillard used a speech in Sydney to argue why carbon pricing was necessary, and repeated her claim Mr Abbott will not repeal it, despite promising to do so.
"In the end the doomsayers always have to admit they were wrong," she said.
Source: Econews, 5 July 2012
