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Fair Trading Penalties & Enforcement Strengthened

Media Release

Issued 23 July 2003-04 / 008

Penalties doubled and enforcement powers
strengthened by new Fair Trading legislation

Recent changes to the Fair Trading Act have extended the Commerce Commission’s powers to deal with misleading and unfair trading practices by businesses.

The amendments, which were passed in Parliament earlier this month, double the maximum penalties for offences from $30,000 to $60,000 for individuals and $100,000 to $200,000 for companies.

Acting Chair Paula Rebstock said that the provisions relating to new information gathering powers and the extension of search powers would be of immediate interest to businesses and benefit to the Commission.

“The Commission can now, by serving a notice, require businesses to provide information and documents relating to an investigation. In addition, the Commission will be able to use a search warrant to find out the extent of offending, such as the amount of money made from the activity. It will no longer be limited to finding information to establish an offence,” Ms Rebstock said.

“These amendments mean the Commission will be able to resolve investigations more efficiently and effectively – with stronger and more complete evidence to support those cases it take to court. It is important that businesses understand that it will be an offence not to comply with the new information gathering provisions.”


“Pyramid schemes will be hit hardest by the new legislation, with the maximum penalty of $200,000 available for both companies and individuals, and the court being able to order payment of the equivalent revenue or ‘commercial gain’ earned from the offending,” she said.

“There is no doubt that the main benefit of the amendments is enhanced protection for businesses who comply with the law and consumers.” Ms Rebstock added.


Background
The Fair Trading Act 1986 protects consumers from misleading and deceptive conduct, and unfair practices, by businesses. It also provides for the disclosure of consumer information relating to the supply of goods and services, and product safety standards to protect against unsafe products.

The Fair Trading Amendment Act 2003:

increases maximum penalties for all offences:
- $60, 000 for an individual;
- $200, 000 for companies;

in the case of pyramid selling schemes, the maximum penalty is the higher of:
- $200, 000 for both individuals and companies; or
- the value of any commercial gain derived from the scheme;

- amends the definition of pyramid selling schemes;
- extends the limitation period for criminal offences;
- removes the requirement to provide undertakings as to damages for interim injunctions;
- provides jurisdiction to the District Court to order corrective advertising;
- extends search powers to include ability to obtain information as to the extent of the offending;
- provides new information gathering powers (similar to s 98(a) and (b) of the Commerce Act).


Commission media releases can be viewed on its web site www.comcom.govt.nz

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