Not fair trading

Several of New Zealand’s largest retail businesses have been convicted of breaches of the Fair Trading act within the last five years. Some were smart enough to settle with the Commerce Commission before being convicted, but most admitted a breach of the act.

  • Telecom was convicted and fined $500,000 in 2009, pleading guilty to 17 charges from the nasty 2006 era. They also admitted breaching the act in 2011, refunding over $2.7m to 47,445 affected customers. It’s nice that they found and reported this breach themselves.
  • Vodafone was convicted and fined $960,000  last year for 21 charges, with Judge David Harvey describing calling the campaign “clearly false and misleading” and the conduct “gross carelessness“. This followed 6 other charges successfully prosecuted in 2011.
  • Carter Holt Harvey settled in 2011 and made a voluntary payment of $1.5m to a Christchurch project. The charges were from activity in 1998-2003 where the ComCom alleged that some timber CHH had sold was not up to advertised specification, but CHH did not admit a breach of the act.
  • BNZ settled in 201o with the Commerce Commission after agreeing that its credit card brochures had breached the Fair Trading Act, and acknowledged that they had breached the act.
  • ANZ and ING settled with the Commerce Commission in 2010, and got $45 million repaid to investors in two funds. (It’s nice when the Commerce Commission works this well). In 2008 ANZ was fined $80,000 for a misleading bonus bonds campaign.
  • Air NZ settled with the Commerce Commission this year over price fixing from 2002 to 2006, paying $7.5 million in fines.
  • The Warehouse was convicted and fined $209,600 in 2009 for ‘multiple breaches relating to 2005-2007.

I’ve always been proud of New Zealand’s Fair Trading Act, and the presence of the Commerce Commission.

However Tom Pullar-Strecker writing in Stuff today brings up an interesting point from the delightfully named Licensing Authority of Secondhand Dealers and Pawnbrokers annual report. (I can only find the 2012 version). It seems that companies with convictions in the last five years under the Fair Trading Act are automatically refused a license to buy, sell or otherwise deal in second-hand goods, and in 2013 both Telecom and Vodafone were refused licenses for that reason.

However despite lacking a secondhand dealing license both Vodafone and Telecom are operating a trade-in scheme for mobile phones.

Sure the law might be ridiculously antiquated, but both companies should be aware that they are pushing it here, and it seems they are breaking the law. They should both should stop dealing in second hand phones immediately, but also apply their clearly considerable lobbying power to work to fix the law.

Those Fair Trading convictions are are very serious matter, and while those fines might seem high, they are trivial in relation to the sizes of the companies. It’s especially galling for companies that are so pervasive in New Zealand commerce to mislead us, and I am not unhappy that this somewhat unintended consequence of those breaches has come to light.

Published by Lance Wiggs