Source: Radio New Zealand
Economic Growth Minister Nicola Willis. RNZ / Samuel Rillstone
The government has announced plans to increase fines from $600,000 to $5 million or more for breaching the Fair Trading Act.
It is also backing away from a ban on directors taking out indemnity insurance, and proposals to expand infringement fees and unfair contract terms provisions.
Economic Growth Minister Nicola Willis and Commerce and Consumer Affairs Minister Scott Simpson said the change would be made through a bill to be introduced to Parliament in early 2026.
The legislation would increase the fines to whichever was highest – three times the value of the commercial gain made, the total value of the transactions or $5m for body corporates and $1m for individuals.
The current penalty is a maximum $600,000 for body corporates or $200,000 for individuals.
It would also introduce a new civil penalties regime for most breaches of the Act, allowing the Commerce Commission to take action on the balance of probabilities, rather than meeting the higher criminal standard of proof.
Serious or deliberate offences – like demanding payment without intending to supply, serious product safety breaches or obstructing the Commerce Commission – would remain criminal.
Penalties for breaching a management ban would also increase from $60,000 to $200,000. Penalties for other conduct – like breaching consumer information requirements, consumer transaction rules and impeding enforcement – would also increase from $10,000 for individuals and $30,000 for body corporates, to $60,000 and $200,000.
Commerce and Consumer Affairs Minister Scott Simpson
Gains from breaching the Act under the current system could sometimes outweighed the penalties, Willis said.
“The new regime will eliminate the financial incentives for breaching the Act,” she said.
“They will also help to ensure businesses who play by the rules are not disadvantaged by competitors using unfair means to woo their customers away from them. The existing rules do little to prevent large retailers from further entrenching their market dominance.”
The changes would bring New Zealand more into line with similar countries. For example, Australia hands down penalties for fair trading laws of up to three times the commercial benefit, 30 percent of turnover, or AU$50m (NZ$57.74m).
Willis and Simpson pointed to a 23 percent increase in the number of fair trading complaints made to the Commerce Commission in the past five years.
The same businesses had in some cases breached the law more than once, Simpson said.
“These changes will ensure the law provides stronger incentives to comply and stronger consequences for those who don’t.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
