Australia's largest hotel group, Accor, will be questioned by the Australian Competition and Consumer Commission about proposals to raise prices ostensibly on account of the 10 per cent Goods and Services tax, ACCC Chairman, Professor Allan Fels, said today.
"The ACCC will particularly seek information as to whether there has been an exchange of information between hotel groups on pricing," he said.
"The ACCC is concerned that an Accor spokesman is quoted as saying 'virtually every other hotel' had made the same pricing decision.
"Section 45 of the Trade Practices Act 1974 prohibits a contract, agreement or understanding between competitors which has the purpose or effect of maintaining or controlling prices.
"The courts have given a wide meaning to the term 'understanding'," he said. "Severe penalties have been brought down for collusion on prices. The maximum penalty for a corporation, per offence, is $10 million. Individuals face penalties of up to $500,000.
"The ACCC is further concerned that hoteliers are suggesting that on 1 July they will pass on the full increase in GST to consumers without also passing on the expected benefits of the New Tax System.
"These benefits would include savings in equipment, such as computers, postage, travel, petrol, stationery, and suchlike. Some of these savings will, in fact, be available immediately. Others that will take time to flow through may be estimated with reasonable certainty.
"Not to reflect some anticipated savings in prices set for six monthly periods is likely to cause net profit margins to rise, contrary to the price guidelines. The ACCC will not hesitate to take firm action to enforce adherence to the guidelines. Such action would no doubt have a significant negative effect on a business's reputation.
"I believe hotel customers will not be impressed with any hotel that passes on any tax rises in full but pockets for itself any tax benefits.
"The ACCC has received an initial response from Accor and will follow up the matter".
"The ACCC will particularly seek information as to whether there has been an exchange of information between hotel groups on pricing," he said.
"The ACCC is concerned that an Accor spokesman is quoted as saying 'virtually every other hotel' had made the same pricing decision.
"Section 45 of the Trade Practices Act 1974 prohibits a contract, agreement or understanding between competitors which has the purpose or effect of maintaining or controlling prices.
"The courts have given a wide meaning to the term 'understanding'," he said. "Severe penalties have been brought down for collusion on prices. The maximum penalty for a corporation, per offence, is $10 million. Individuals face penalties of up to $500,000.
"The ACCC is further concerned that hoteliers are suggesting that on 1 July they will pass on the full increase in GST to consumers without also passing on the expected benefits of the New Tax System.
"These benefits would include savings in equipment, such as computers, postage, travel, petrol, stationery, and suchlike. Some of these savings will, in fact, be available immediately. Others that will take time to flow through may be estimated with reasonable certainty.
"Not to reflect some anticipated savings in prices set for six monthly periods is likely to cause net profit margins to rise, contrary to the price guidelines. The ACCC will not hesitate to take firm action to enforce adherence to the guidelines. Such action would no doubt have a significant negative effect on a business's reputation.
"I believe hotel customers will not be impressed with any hotel that passes on any tax rises in full but pockets for itself any tax benefits.
"The ACCC has received an initial response from Accor and will follow up the matter".