A cautionary tale……..

Jeff Rogut
July 4th 2012

The article below was featured in The Age newspaper. It is a stark reminder to all that no matter what initiatives or, as in this case, taxes the government introduces, we need to be responsible in our actions.

There is a focus now on the carbon tax, which may impact your businesses [both suppliers and retailers alike] and there will no doubt be a focus on the plain packaging of tobacco planned for introduction later this year.

By treating these matters lightly you do potentially run the risk of financial as well as reputational damage and it is therefore wise to seek specialist advice if you are uncertain about any aspects of the measures, or if you fail to comply with their requirements.

Our industry takes our retail responsibility seriously, so it is worthwhile ensuring that your teams are aware of their actions during times of change such as we are going through now.

Brumby’s munches humble pie

Jessica Wright and Judith Ireland
July 4, 2012
The Age

The ACCC is currently looking into Brumby’s Bakery about potentially misleading claims about the carbon tax.

The parent company of the Brumby’s Bakery franchise has apologised for ‘‘foolish and ill-considered’’ advice that encouraged bakeries to put up prices and ‘‘let the carbon tax take the blame.’’

It was revealed today the consumer watchdog was looking into Brumby’s – which bills itself as one of Australia’s ’’largest and most successful franchise groups’’ – about potentially misleading claims about the tax.

In a copy of a June 2012 “Backmix” newsletter – first detailed in the West Australian – Brumby’s managing director Deane Priest provides tips to ’’find some extra sales’’.

’’We are doing an RRP (recommended retail price) review at present which is projected to be in line with CPI, but take an opportunity to make some moves in June and July, let the Carbon tax [sic] take the blame, after all your costs will be going up due to it,’’ the newsletter says.

A spokesman for the consumer watchdog confirmed today that it was questioning the bakery franchise about the newsletter that circulates among its more than 320 outlets in Australia and New Zealand.

The Australian Competition and Consumer Commission spokesman said in a statement: ”In light of the comments made in the newsletter the ACCC will be making inquiries of Brumbies [sic].

”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.’’

In the wake of the ACCC’s statement, the head of the Retail Food Group, Brumby’s parent company, Tony Alford issued his own statement to the the stock exchange saying the comments ‘‘were not sanctioned and are of significant concern to the board’’.

Mr Alford said: ‘‘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.

‘‘But rather (they) were foolish and ill-considered remarks when placed in the context of the internal franchisee communication.’’

Mr Alford conceded however that as a consequence of the carbon tax ‘‘there will be further margin and cost pressures on our franchisee community’’.

In a copy of a June 2012 “Backmix” newsletter – first detailed in the West Australian – Brumby’s managing director Deane Priest provides tips to ”find some extra sales”.

”We are doing an RRP review at present which is project to be in line with CPI, but take an opportunity to make some moves in June and July, let the Carbon tax [sic] take the blame, after all your costs will be going up due to it,” the newsletter says.

If the ACCC finds there has been wrongdoing, it can issue warning letters, infringement notices of $6600 or take court action with fines up to $1.1 million.

The ACCC said that businesses were entitled to increase their prices as they see fit, ”so long as any claims or representations made about the impact of the carbon price are truthful and have a reasonable basis.”

The watchdog also encouraged consumers to shop around and ”think twice” about carbon tax price representations.

Assistant Treasurer David Bradbury warned businesses not the “jack up their prices” and blame it on the carbon tax.

“This sort of behaviour is reprehensible,” he told reporters in Sydney.

He said the ACCC – and the courts if necessary – would determine if Brumby’s had broken the law.

Last month, Mr Bradbury warned businesses about ACCC penalties after the Opposition distributed posters – that blame the carbon tax for price hikes – to small businesses.

Opposition small business spokesman Bruce Billson said the Coalition posters were accurate and explained government policy.

At the time, Small Business Minister Brendan O’Connor said the impact of the carbon tax on small businesses will be modest.

”We think about $4 or $5 a week for a very small business doing their job,” he said.

Retail Food Group, which manages Brumby’s, has been contacted for comment.

When asked about the Brumby’s situation, Opposition Leader Tony Abbott said that people needed to be “fair dinkum”, but that every single business in Australia would be looking at costs due to the carbon tax.

“I think that every business in Australia is going to be under cost pressure,” he told reporters while visiting a cordial manufacturer in Adelaide.

“Sure, businesses have got to be fair dinkum, there can be no rip-offs.”

Mr Abbott said that the carbon tax was an “economic disaster”.

“I will not rest until this tax is gone,” he said.

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