Alarm bells on new advertising rules
BY PHILIP LORD | 5th May 2009
After a working group meeting in Melbourne last Friday at which 70 industry representatives were briefed on the new requirements from the Australian Competition and Consumer Commission (ACCC), the FCAI and car companies have raised a number of issues with the guidelines the ACCC has drafted and the range of interpretations that could be made of the legislation, which comes into force on May 25.
A number of attendees, who did not want to be named, told GoAuto this week they had concerns about the complexity of the new legislation and how it could cause problems for an industry that always runs various promotional campaigns and incentives to move stock.
The other issue raised was the practicality of aligning prices across the board when the additional ‘component’ (or ‘on-road’) costs can vary so much.
Car registration costs differ between states, compulsory third-party insurance costs can vary according to the buyer’s driving history and postcode, and delivery costs can vary significantly – by as much as $2000 in extreme examples.
“There’s not any particular issue or discomfort across the industry with the legislation itself – or industry’s understanding of the intention of the legislation,” said FCAI chief executive Andrew McKellar.
“Where the concern seems to have arisen is in the draft guidelines the ACCC has put together as part of its revised pricing manual for the motor vehicle industry and its interpretation of the legislation.
“All this has to be ready to roll by 25 May. I think there’s still a fairly significant gap between some of the interpretation the ACCC has placed on the legislation and the expectations of industry. We now have to work out how we resolve those discrepancies.” Mr McKellar pointed to dealer delivery costs as an area of concern.
“That raises concerns for some if that, in effect, results in a lessening of competition if you’ve got to start seeking to gain some common understanding on dealer delivery charges so that you can advertise a common price,” he said.
“We’ve got to discover how that works in practice.” Mr McKellar said the FCAI was continuing a dialogue with the ACCC to resolve the concerns ahead of the May 25 deadline, when the federal government’s ‘Clarity in Pricing Bill’ – which is an amendment to section 51A of the Trade Practices Act – comes into effect.
The new law requires that all businesses – such as car manufacturers and dealers – which offer goods or services with additional ‘component’ costs to include all such costs with the product or service itself as a single price.
The bill is intended to remove the contentious issue of the ‘small print’ in advertising, where the actual price paid for a car can be several thousand dollars more than the advertised price, because of various additional fees and charges.
Typically, a car manufacturer’s recommended retail price as it stands now is the price of a standard model without optional extras as it leaves the manufacturer’s central depot inclusive of GST and federal tariff charges. It does not include charges for delivery to the dealer, pre-delivery preparation charges, optional extras, stamp duty, registration fees or ‘green slip’ fees.
While the new law requires that a single, all-inclusive price be shown prominently in any advertising, the component prices can also be displayed.
“Gone are the days when consumers have to wonder what fees and charges are going to be added when they actually agree to buy something,” said the federal minister for competition policy and consumer affairs, Chris Bowen.
“This bill gives clarity and certainty to buyers throughout Australia.”