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Component Pricing: Section 53C of the Trade Practices Act 1974

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The effect of the new S.53C of the Trade Practices Act is that if you supply goods or services that are of a kind ordinarily acquired for personal, domestic or household use or consumption, you must ensure that in any advertisement, your prices are presented as a single price.

S.53C(1) states that:

A corporation must not, in trade or commerce, in connection with:

 

(a)        the supply or possible supply of goods or services to a person; or

(b)        the promotion by any means of the supply of goods or services to a person or of the use goods or services by a      person;

make a representation with respect to an amount that, if paid, would constitute a part of the consideration for the supply of the goods or services unless the corporation also specifies in a prominent way and as a single figure, the single price for the goods or services.

 

To determine whether S.53C applies to you and your advertisement, answer these questions:

Is a representation regarding the price of goods or services being made?

A representation is not limited to advertisements.  It may be written or verbal and may even include silence or the failure to correct a customer’s mistake as to price.

Are the goods or services “ordinarily acquired for personal, domestic or household use or consumption”?

Whether or not goods or services are acquired for personal, domestic or household use or consumption is a question of fact.  Courts have historically interpreted this phrase broadly.  For example, while commercial-type goods such as farm or industrial equipment are not included, it may include goods acquired for a commercial purpose where such goods or products also have a personal, domestic, or household use.

Is the representation being made to a party other than a body corporate?

S.53C does not apply if the representation is made exclusively to a body corporate.  However, where prices are represented to the general public, such as on TV, radio, internet or newspaper, S.53C applies.

If yes to all of the above, then consider the following:

Have the following costs been included when calculating the total price payable for the goods or services?

  • All mandatory charges payable by the consumer to the supplier?
  • All taxes, duties, fees, levies and other charges imposed on the supplier that will be passed on to the consumer (for example, GST)?

Has consideration been given to any other costs that a consumer would assume would be included in the price?

You are not required to include items which are at the option of the consumer.  However, you must include items that a consumer would assume would be included in the price.  For example, metallic paint on a car is an option that need not be included in the single price, but dealer delivery and other on-road costs should be included.

If component pricing is being used, is the single price also stated in a prominent way?

 

Except in certain circumstances, ‘prominent’ means at least as prominent as the most prominent parts of the price for the supply.

Penalties for non-compliance

The penalties for non-compliance with S.53C are stiff.  Up to $1.1 million in fines and criminal penalties can apply to anyone knowingly directly or indirectly involved in a breach of this legislation.

If you want to avoid stiff penalties, MST can help.  Ask us to review your advertisements and other representations of prices to ensure that you comply with the legislation.

Author: Louise Wolf