The parent company of Brumby’s has apologised over carbon tax advice given to the bakery franchisees, saying it was foolish and ill-considered.
Retail Food Group chief executive Tony Alford said he unreservedly apologised for the “unacceptable error of judgment”.
Mr Alford said an email sent by the company's managing director to franchise owners suggesting they raise prices and "let the carbon tax take the blame".
Breaking its silence a day after The West Australian revealed the existence of the newsletter signed by Brumby's managing director Deane Priest, Retail Food Group today issued a saying it was "not sanctioned and (was) of significant concern to the board".
"Following thorough investigation of the matter, we are satisfied that the comments were not made in an effort to encourage our franchise community to link RRP (recommended retail price) adjustment to the carbon tax, but rather were innocent albeit foolish and ill-considered remarks when placed in the context of the internal franchisee communication," Mr Alford said.
RFG's comments came as Federal Assistant Treasurer David Bradbury said it was "morally reprehensible" for the company to try to camouflage its price increases with the introduction of the carbon tax and Opposition Leader Tony Abbott tried to argue that Brumby's, like other companies, was facing cost pressures because of the carbon tax.
The West Australian revealed on Tuesday that the Australian Competition and Consumer Commission was looking into the matter after the newsletter was sent to franchisees last month.
In an internal newsletter sent to franchisees Mr 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.
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 misleading claims.
In a statement to the stock exchange, Mr Alford said the comments “were not sanctioned and are of significant concern to the board”.
He said that as a consequence of the carbon tax “there will be further margin and cost pressures on our franchisee community”.
“However, it was inappropriate to link this matter with the imminent RRP increase.”
The company is writing to franchisees about the “limited relevance” of the carbon tax to recently adjusted prices.
“We are also liaising with the ACCC in connection with the matter,” Mr Alford said.