More Commission action against oil companies
More Commission action against oil companies: Mobil and
Caltex misleading advertising of petrol prices
Media
Release 2000/50
The Commerce Commission has warned Mobil Oil New Zealand Limited and Caltex New Zealand Limited to take urgent steps to ensure that they do not make misleading claims about petrol prices, or they will face prosecution under the Fair Trading Act.
Commission Fair Trading
Manager, Rachel Leamy, said that both companies were
charging more for petrol at pumps—Mobil at Omarama and
Caltex at Culverden—than they advertised on roadside
signs.
These are the Commission’s third and fourth
actions against oil companies this year.
Last month
the Wellington District Court fined Shell New Zealand
Limited $10,000 after it did not act on a Commission warning
and continued to charge more for petrol at Franz Josef than
it advertised on the roadside sign.
In February
this year the Auckland High Court ordered Caltex, Mobil and
Shell to pay penalties totalling $1.175 million for
breaching the Commerce Act by colluding over prices in
Auckland.
"Petrol is a vital part of a modern
economy," Ms Leamy said. "The Commission actively monitors
the oil industry for possible breaches of the Fair Trading
and Commerce Acts, and we will continue to do
so.
"The problems we have found so far with higher
prices at some pumps than on the roadside signs appear to be
caused by weak business practices rather than deliberate
attempts to mislead customers.
"Whatever the
reason, this practice has the potential to mislead customers
about the price of a vital commodity and must
stop."
Ms Leamy said that these cases also
highlight a wider issue about prices relevant to all
industries: "Price is a fundamental element of healthy
competition and is an important part of most consumers’
buying decisions.
"If competition is to be
effective, then consumers need to be able to rely on the
information provided so that they can make informed choices
about what they will, or won’t, buy.
"Misleading
advertising hurts consumers and can distort competition and
hurt competitors by taking away their customers unfairly.
For these reasons the Act prohibits false or misleading
claims about prices.
"We see warnings as a way of
helping businesses understand the law. We follow up
warnings, and if they are not heeded we consider further
action."
Background
Fair Trading Act
cases
The Fair Trading Act prohibits false or
misleading claims about prices.
Mobil was charging
7 cents a litre more for 91 octane petrol at its Omarama
Truck Stop than was advertised on the billboard outside the
petrol station. The advertised price was 103.9 cents. The
price charged was 110.9 cents.
Caltex was charging
5.1 cents a litre more for both 91 and 96 octane petrol at
its Culverden truck stop than was advertised on the
billboard outside the petrol station. The advertised prices
were 105.9 and 110.9 cents. However the prices charged were
111 cents for 91 octane and 116 cents for 96 octane.
Ms Leamy said that the Commission had previously
warned Shell New Zealand Limited about the same problem at
Shell’s Franz Josef petrol station.
The Commission
followed up its warning to Shell and found that the problem
had not been fixed. The Commission then prosecuted Shell,
which last month pleaded guilty to breaching the Fair
Trading Act and was fined $10,000 by the Wellington District
Court.
Commerce Act case
The Commerce Act
prohibits collusion among competitors over any parts of a
price.
In September 1997 the Commission alleged
that Caltex, Mobil and Shell colluded to jointly withdraw a
discount from the price of petrol at more than 50 Auckland
petrol stations. The discount was in the form of a free car
wash offered to customers who spent $20 or more on
fuel.
After various legal challenges from Caltex
and Mobil, the case went to trial in August and September
last year, with Justice Salmon giving his decision in
October.
In February this year Justice Salmon
imposed total penalties of $1.175 million on the three
companies.
Media contact: Fair Trading Manager
Rachel Leamy
Phone work (04) 498 0908, cellphone 025 208 0841
Senior Advisor Communications Vincent
Cholewa
Phone work (04) 498 0920