Carrot, not stick, keeps trade fair

ROB STOCK
Last updated 05:00 11/11/2012

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The activities of retail telecommunications companies make up 15 per cent of Fair Trading Act complaints, Greg Allen, manager of the competition section of the Commerce Commission, told an audience of retailers and honey producers in Auckland last week.

That has earned the telco industry the status as one of the three key targets for the commission's Fair Trading Act enforcement.

Allen told his audience the other two were on misleading "country of origin" labels passing off goods as being made in New Zealand, and the major retailers, including national supermarket chains.

The commission has been doing less litigation, in part due to a budget squeeze, but it has been developing new modes of interaction that were resulting in more law-abiding behaviour from traders, he said.

Allen gave the example of the telecoms companies, with which there were now regular "advocacy" meetings.

"We have noticed that by using the carrot, the compliance has been improving significantly," Allen said.

Traders against whom complaints are levied are now much more likely to be contacted by the commission on a friendly basis and given the opportunity to improve their behaviour and fix issues voluntarily.

There has been a growing level of disquiet about goods and products from outside the country being passed off as made here, he said.

"We believe that there is a lot of stuff that is being labelled as product of New Zealand when in fact it is not," Allen said. "It might have some component, or something done to it in New Zealand, but the main product has been imported and packaged in New Zealand."

That had the potential to cause harm to local industry through misleading consumers.

Allen said because of complaints about the behaviour of major retailers, including large supermarket chains, it has instigated a "major trader programme" to monitor their behaviour.

He gave the example of a "major national supermarket chain" advertising a beer sale with a stated reduction on shelf price which did not reflect the prices it had been charging.

The commission believes many breaches of the Fair Trading Act are not intentional.

"We feel a lot of businesses don't know their obligations under the Fair Trading Act and are not breaching the act on purpose," Allen said.

But, he warned, businesses approached by the commission needed to consider seriously the consequences of ignoring it.

While getting settlements that don't involve spending money on lawyers is seen as better value for money, the commission will continue to use the courts against intransigent traders.

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"We are aiming at early intervention, but if people don't try to comply, then we will head up towards litigation," Allen said.

Things could get even more direct with the Government considering giving the commission the power to issue infringement notices with instant fines. Also on the cards are some large increases in the fines that companies and individuals who breach the FTA may face, as well as the ability to seek banning orders for serial breachers.

They are measures designed to remove any impression businesses have that fines for breaching the Fair Trading Act should be seen as a cost of doing business.

- Sunday Star Times

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