Brumby's bakery franchises across Australia have been told to hike up their prices and blame it on the carbon tax.
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The Australian Competition and Consumer Commission is investigating why Brumby's managing director Deane Priest issued an internal memo last month containing that directive.
The memo urges Brumby's franchisees to look for opportunities to sell their bakery products above recommended retail prices because that is "ALL profit".
Mr Deane then tells the franchisees how they can go about pumping up their prices.
"... 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.
In a statement issued today, the ACCC said it will make direct enquires about the memo with Brumby's management.
"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," the statement said.
"Businesses are entitled to increase their prices as they see fit.
"It is business as usual, so long as any claims or representations made about the impact of the carbon price are truthful and have a reasonable basis."
The Government has warned against making false claims about the carbon tax sparking price rises.
Businesses face fines of up $1.1 million for misleading their customers in that way.
Climate Change Minister Greg Combet said the Brumby's issue should serve as a warning to other companies.
"I haven't seen the actual letter, but I'd caution Brumby's to be very careful because this is exactly the sort of thing that the ACCC has been warning about," Mr Combet said.
"People can increase their price to the extent that it is justified on the basis of the carbon price impact, but you can't go around misrepresenting price rises."
Brumby's is one of Australia's largest bakery chains and is part of the Retail Food Group which also owns Michel's Patisserie and Donut King outlets.
Brunby's could not be contacted for comment.