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Media in the clear on car pricing

Price point: Drive-away pricing in end-of-financial-year special advertising.

Car industry seeks legal opinion on ACCC’s ‘clarity in pricing’ policy

General News logo1 Jun 2009

THE Australian Competition and Consumer Commission (ACCC) has eliminated the threat of prosecution of third parties – websites, newspapers, magazines – that publish new vehicle prices that might not be the full and final price in every state.

The ACCC officially confirmed that it has changed the rules on the supply of prices by car companies to the media to continue allow both parties to provide comparitive national prices exclusive of stamp duty, compulsory third-party insurance and delivery charges.

To ensure there is no confusion between a price provided by a car company for media use and that used in advertising, the ACCC says it should be made clear whether a published price is a driveaway price or not, and that the term recommended retail price should replaced by “recommended price before statutory and delivery charges”.

While the Australian motor industry has welcomed the ACCC clarification, the Federal Chamber of Automotive Industries arranged another meeting with the ACCC to seek clarification of the commission’s new interpretation of Section 53(C) of the Trade Practices Act, which threw the industry’s advertising and marketing operations into disarray last week following its commencement on May 24.

“The ruling that third parties are not captured by Section 53(C) is a significant clarification of the situation,” said FCAI chief executive Andrew McKellar today.

“We’ll be asking them a range of quite simple questions and hope that we will get some equally simple and commonsense answers.” Mr McKellar said the chamber also had commissioned a legal opinion on Section 53(C) of the Trade Practices Act and the ACCC’s interpretation of it.

“We are also seeking to achieve further clarification through the development of a more detailed legal opinion,” he said.

“We want to ensure that our interpretation, our understanding of the legislation stacks up against an expert legal opinion.

“And if there is a difference between what that opinion provides and the ACCC’s fairly broadbrush or blanket approach to the coverage of some of these changes, then obviously we would need to take that further with the ACCC or go back to government and seek to ensure the interpretation is appropriately reconciled with what the act states.”

80 center imageLeft: FCAI chief executive Andrew McKellar.

The new interpretation of Section 53(C) was focused on an issue known as component pricing and was meant to stop consumers being misled by the promotion of artificially low prices which are then expanded by the addition of hidden on-costs.

It was prompted by the rash of airline advertising a few years when companies were offering tickets at unrealistically low prices and then adding fuel surcharges and various taxes.

The new ruling has forced the motor industry to abandon its normal pricing approach of quoting a recommended retail figure and then adding “plus on-road costs”. On-road costs include registration, third-party insurance, stamp duty and dealer delivery charges.

All these on-road costs vary from state to state and cannot be standardised into a single national “drive-away” price.

Almost all companies have taken price information off their websites for fear of being prosecuted, leaving consumers with no alternative but to switch back to the more laborious dealer-by-dealer survey to find the best price.

Read more:

Chaos rules in car price advertising

ACCC shafts car buyers

Alarm bells on new advertising rules

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