Surcharges may be back on the menu

Published On 31/05/2013 | By William Osborn | Consumer protection

Following on from our previous post in which we reported on Government’s proposal to amend the Competition and Consumer Act 2010 (Cwlth) in order to exempt restaurants and cafés from the single pricing requirements in the ACL, an amendment bill is currently before Parliament to do exactly that.

The single pricing provisions in the ACL prohibit businesses from stating a price that is only part of the cost, unless they also prominently advertise the single price for the goods or services. For example, as in this case, displaying prices on a restaurant menu in a prominent fashion and including the words in small print “10% surcharge on Sundays and 15% Public Holidays”.

Following the introduction of the single pricing provisions in 2009, a recommendation was made by the Productivity Commission (PC), in its 2010 review of Regulatory Burdens on Business to exempt restaurants and cafés on the basis that it was likely to impose significant regulatory costs on these small businesses without providing any substantial additional benefit to consumers.

The Competition and Consumer Amendment Bill 2013 (Cwlth) (the Bill) currently before the House of Representatives proposes to amend the component pricing provision by including a regulation making power. This would enable the Commonwealth Minister to exempt a prescribed class of representations from this prohibition by amending the Competition and Consumer Regulations 2010 (Cth).

The second reading speech to the Bill states that the purpose of the regulation making power is to allow an exemption to be made for restaurant and café menu surcharges on specific days. This will effectively remove the need to provide a separate menu on days where the café or restaurant chooses to apply a surcharge (e.g. Sundays and public holidays).  The justification for the amendment replicates the PC’s recommendation for the need to reduce the regulatory burden on small businesses in this sector, while being mindful of the need to ensure price transparency for consumers.

An exposure draft of Competition and Consumer Amendment Regulation 2013 (Cwlth) provides for a prescribed class of representations made on a restaurant’s menu which includes a surcharge on food purchased on a specified day(s).  It is proposed that such Regulations will follow assent of the Bill.

While the requisite State and Territory support in favour of the proposed amendment has been received, the Consumer Action Law Centre provided a submission earlier this year opposing the changes. It was highlighted that the Commonwealth Minister would be able to exempt certain representations from the provisions without the support of the States and Territories.

Whether or not this power will be used beyond the stated purpose of the amendment to the Bill in the future is uncertain. However, the power granted to the Commonwealth Minister is broad enough to apply to any representation which would otherwise be captured by the single pricing requirement.

Authored by William Osborn and Kim de Kock

Photo credit: CZH Hospitality / Flickr / CC-BY

About The Author

is a solicitor in the Melbourne office at King & Wood Mallesons.

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