Component pricing

The Minister for Competition Policy and Consumer Affairs, the Hon Chris Bowen MP, has announced that the Government will proceed with amendments to the Trade Practices Act 1974 (TPA) relating to component pricing in advertising to consumers to ensure consumers know a single total price they will have to pay for goods and services that they buy.

Component pricing is the practice of advertising prices as the sum of separate components, for example, advertising an airfare as $100 plus $48 tax, fees and charges.

Business will not be prevented from using component pricing, provided that the total price is also displayed prominently as a single figure.

The ASIC Act will not be amended: the new rules will not apply to  financial service providers.

The provision will apply only to business-to-consumer advertisements to the extent that a single figure price is quantifiable at the time of making a representation in an advertisement.The provisions will not apply to representations made between businesses or between business and government.

Schedule 1 of the draft Bill contains the component pricing amendments. In particular, the draft Bill contains the following changes since the previous consultation rounds:

• The definition of 'single price' excludes charges relating to postage and handling.
• The Government will not proceed with mirror amendments to the Australian Securities and Investments Commission Act 2001. This will allow the current legislative arrangements to continue to apply to financial services.

Stakeholders are invited to submit comments the draft Bill by 17 April 2008