FOOD GROUP RISKS $1B FINE FOR ‘FOOLISH’ REMARKS

5 July 2012,

FOOD GROUP RISKS $1B FINE FOR ‘FOOLISH’ REMARKS

THE ASX-listed owner of Brumby’s Bakeries could cop a $1.1 billion fine after the subsidiary urged franchisees to lift prices due to the new Carbon Tax.

The company could be forced to shell out the nine-figure sum for each contravention, if an Australian Competition and Consumer Commission investigation currently underway finds the bakery network had mistakenly linked price rises to the Carbon Tax.

Brumby’s managing director Deane Priest recently told franchisees in an internal newsletter that the Federal Government’s $23 price on carbon should “take the blame … after all, your costs will be going up due to it”.

However, Southport-based Retail Food Group, which owns Brumby’s Bakeries, Donut King, Michel’s Patisserie and bb's cafe franchise systems, has criticised the link between price rises and the Carbon Tax as “inappropriate”.

“Following thorough investigation of the matter, we are satisfied that the comments were not made in an effort to encourage our franchisee community to link regular retail price adjustment to the Carbon Tax, but rather were innocent albeit foolish and ill-considered remarks,” says CEO Tony Alford (pictured) in a written statement.

“The principal purpose of the communication was to promote franchisee evaluation of in-store pricing practices due to cost and margin pressures.

“We therefore express our genuine regret over this isolated incident and unreservedly apologise for this unacceptable error of judgment.”

RFG shares fell slightly today to $2.65 per unit.

 

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