News Archive Search
Are you ready for the new component pricing laws?
If your business uses component pricing to promote its goods and services, then from 25 May 2009 you must also provide consumers with a prominent single total price for the goods and services. This requirement applies to all advertising - catalogues, websites and other advertising, as well as point of sale promotion in store.
Prominent single price requirement
From 25 May 2009, businesses will be prohibited from using component pricing when advertising the price of goods or services unless they also specify in a prominent way the single price that the consumer must pay to purchase the goods or services.
What is the "single price"?
The single price is the total minimum price the consumer must pay that is able to be calculated at the time the price representation is made, inclusive of all fees, taxes and charges. However, the single price does not need to include:
What is in a "prominent way"?
With exception of certain services contracts (discussed below), the single price must be stated at least as prominently as the most prominent component.
In a recent publication, the Australian Competition and Consumer Commission has also said that a prominent single price is one that:
Periodic payments under services contracts
The new component pricing provisions also apply to contracts for the supply of services that provide for periodic payments over the term of the contract, such as mobile phone contracts. However, for these contracts, whilst the single price must be stated prominently, it does not need to be as prominent as any other component.
This means, for example, that if a business offers consumers mobile services for $30 per month under a 24 month contract, the total minimum price payable by the consumer ($720) needs to be stated prominently but this total price does not need to be as prominent as the monthly charge.
The single price requirement does not apply if the price representation is made exclusively to another business. However, where price representations are made to both consumers and corporations, a single price will still need to be stated.
Consequences of non-compliance
There are parallel civil and criminal provisions implementing the new component pricing requirements. This means that failure to comply with the new provisions will expose businesses to potential fines of up to $1.1 million for companies and $220,000 for individuals, in addition to civil remedies such as injunctions, declarations and damages.
Baker & McKenzie has a longstanding commitment to the travel and leisure industry for more than 20 years. We constantly advise on major divestments, acquisitions and developments of hotels and resorts, hotel management contracts, integrated resort developments golf course schemes, timeshare schemes, liquor licensing, government regulation, and problems that arise with the ongoing management of properties.
As the economy continues to experience the fallout from the global financial crisis, our insolvency and restructure team is able to assist in relation to all aspects of insolvency related transactions.
We act for local and international public and private companies, multinationals, investment banks, investors, developers, operators, financiers, consultants, service providers and other prominent industry participants doing business across Australia and offshore markets.
Our Hotels, Resorts & Tourism Group comprises experienced corporate, real estate, taxation, stamp duty, employment law and construction practitioners with extensive knowledge of the hotels, resorts and tourism industry. The size and diversity of our team enables us to deliver a complete, seamless and portable service, ranging from entire project management to smaller scale advice work, from any region of the world and tailored to meet our client's specific requirements.
As part of an integrated global practice, our Hotels, Resorts & Tourism Group is supported by 241 locally qualified lawyers resident throughout Asia Pacific, Europe, the Middle East and North America. A large number of the organizations involved in the industry are multi-jurisdictional and Baker & McKenzie, through its extensive network of 69 offices, has traditionally been retained by many of the major participants in the industry.
Visit our sponsors