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Fuel costs must be included in prices: Commission

Fuel costs must be included in prices: Commission

The Commerce Commission is warning businesses that they must include the cost of fuel in their prices and not add it as a “surcharge” or fuel charge.

The warning follows 12 complaints from customers and competitors about companies adding extra charges for fuel.

In November 2005, in a judgement on Air New Zealand’s advertising, Justice Thorburn ruled that fuel costs are a normal operating cost of business and must be included in prices.

Air New Zealand’s advertisement in which fuel costs were charged separately “smarts most unpalatably of “sharp” and unacceptable practice,” Judge Thorburn said.

Since that judgement the Commission has contacted more than 70 businesses, mainly in the road transport industry. Of these, 32 were found to be imposing extra charges for fuel. The Commission found fuel charges ranging from 1.4% to 10% of the total price.

Commerce Commission Director of Fair Trading Deborah Battell said that the Air New Zealand judgement was clear.

“The Court has found that prices which exclude the cost of fuel are false,” Ms Battell said.

“Charging the cost of fuel separately gives a false impression of prices which makes it difficult for customers to shop around. Competitors who don’t impose the charge are also disadvantaged.”

Ms Battell said the Commission was putting New Zealand businesses on notice that they must incorporate fuel costs in their prices.

“If businesses continue to impose fuel charges they risk prosecution,” said Ms Battell.

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