The competition watchdog will question one of the country's biggest franchise groups, Brumby's Bakeries, after it wrote to franchisees suggesting they raise prices and "let the carbon tax take the blame".
In an internal newsletter sent to franchisees, a copy of which was obtained by The West Australian, Brumby's managing director Deane Priest recommended some "simple things for you all to do to find some extra sales".
"We are doing an RRP (recommended retail price) review at present which is projected to be in line with CPI (consumer price index), but take an opportunity to make some moves in June and July, let the carbon tax take the blame, after all your costs will be going up due to it," Mr Priest wrote.
It is understood the newsletter was sent to franchise owners last month. Retail Food Group, the listed company that owns the Brumby's franchise, could not be reached last night and Mr Priest declined to comment when contacted.
Retail Food Group's brands include Brumby's, Donut King and Michel's Patisserie. It has 300 Brumby's stores across Australia and New Zealand.
The Federal Government has been vocal in warning businesses against blaming price rises on the carbon tax and the Australian Competition and Consumer Commission has the power to impose fines of up to $1.1 million for the most serious of misleading claims.
Assistant Treasurer David Bradbury said advice given to franchisees in the company newsletter was “not on".
"This sort of behaviour is reprehensible,” he said in Sydney today.
"If any breaches of the law have occurred then those involved in this sort of conduct could be up for fines of up to $1.1 million per contravention."
After The West Australian alerted the ACCC to the Brumby's newsletter, Duncan Harrod, a commission spokesman, said it would make inquiries.
"The ACCC would be concerned if any franchisor encouraged or induced its franchisees to make misleading price claims about the impact of the carbon price," he said.
"Businesses are entitled to increase their prices as they see fit. So long as any claims or representations made about the impact of the carbon price are truthful and have a reasonable basis.
"Consumers are encouraged to . . . think twice and ask questions about carbon price representations that are made to them. Business should take the same approach when dealing with their suppliers and should seek to verify information provided before relying on it to make carbon price claims."
Opposition Leader Tony Abbott said every business was under pressure because of the carbon tax.
“The truth is the carbon tax is going to impact on every price in our country because every price in our country embeds the cost of power and embeds the cost of transport,” Mr Abbott said Adelaide.
“That’s the whole point. If it doesn’t hurt, it doesn’t work.”
Mr Abbott said all businesses needed to be “fair dinkum” when it came to setting prices.
“There can be no rip-offs and the ACCC is right to police any business that is threatening to rip off its customers,” he said.“But I can fully understand why every single business in this country is looking at its costs and thinking of how much prices have got to go up.”