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Unit Pricing Code of Conduct – Post-implementation Review – The Treasury

On 5 August 2008 the Treasury announced its response to the Australian Competition and Consumer Commission’s (ACCC) Grocery Inquiry. A recommendation of the Inquiry was to establish a nationally consistent unit pricing Code. Because a Regulation Impact Statement (RIS) was not prepared for the initial decision to regulate, Treasury was required to complete a Post-implementation Review (PIR). Under the Code, unit pricing is mandatory for store-based grocery retailers, all online grocery retailers and all other grocery retailers that enter the Code. It requires these businesses to display the price of grocery items for a certain unit of measurement (such as grams) in addition to the total price of the item. Based on available evidence, the Review found that: consumer’s often rely on unit prices; are more inclined to choose lower priced products where unit prices are available; and value unit prices even where products are sold in common sizes, weights or quantities. Consequently, the Review found that unit pricing conferred a number of benefits to consumers, such as reducing information load and decision difficulty and the tendency to purchase lower priced products where unit pricing is available. In additional, the Review found that these benefits were likely to be realised at a low cost. Specifically, households that are actively using unit prices would only need to benefit by 32 cents per week, on an average weekly grocery bill of $176, for the benefits of the Code to outweigh its costs. These costs were primarily borne by the affected grocery retailers in complying with the Code. The PIR was completed by the Treasury and assessed as adequate by the Office of Best Practice Regulation.