A quick review of recent Commerce Commission prosecutions shows businesses needing to do more to ensure they are doing things right.

Areas of commerce where businesses have recently come seriously unstuck include:

Product safety standards breaches by Torpedo7 resulted in a fine of $80,000 and by Container Door a $54,000 fine.  

Price-fixing conduct is under the spotlight. New Zealand's first case of 'buyer side' price-fixing was against Ronovationz leading to a $400,000 penalty. The Commission has also recently commenced price-fixing proceedings against a container depot company and a racehorse transport partnership

Misleading or false representations in trade can happen in many different ways. 

Incorrect invoicing lead to prosecutions of three smaller telcos resulting in fines of $121,500. In 2019, Vodafone received a $350,000 fine for billing customers after their contracts had finished, and Spark was fined $675,000 for making false or misleading representations in its customer invoicing. 

In New Zealand's first defended case of a trader making 'unsubstantiated claims' about its product, Kiwipure Limited was fined $162,000 for making unsubstantiated claims about the benefits and effectiveness of its magnetic water filtration system. 

Go Healthy copped a $337,500 penalty for misleading consumers by claiming its supplements were "made in New Zealand" when the key ingredients in most of its products were imported. 

Bachcare was fined $117,000 for misleading consumers by manipulating online reviews posted by users of its services. 

Care must also be taken not to tell people they need products or services which they do not need. Heat pump servicing company Ocean Contracting Ltd is facing ten charges alleging it told consumers they needed refrigerant gas top-ups when in fact they did not. 

The Courts and the Commerce Commission are emphasising the need for businesses to have effective compliance programmes operating. 

In the Torpedo7 case, Judge Roberts said:

"Larger commercial entities should be applying resources to the development of a robust compliance regime."

In the Container Door case, for the Commerce Commission General Manager Competition and Consumer Branch, Antonia Horrocks said:

"It is important for traders to know their legal obligations and to operate compliance programmes to ensure they comply with the law."

And in the Telcos case, Judge Glubb said of the defendant companies:

"It was incumbent upon them to put in checks and balances to ensure no misrepresentations. It was not inadvertent but nor was it deliberate. Rather, it was a failure to implement and then ensure proper processes were operating."

In addition to helping prevent compliance failures, the fact that a business is operating a robust legal compliance programme is likely to be a helpful mitigating factor should there be a breach of the law. Conversely, the absence of any compliance assurance system or process will increasingly count against businesses - even if they have unintentionally breached the law. 

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