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Furniture company breached Fair Trading Act

Furniture company breached Fair Trading Act

A New Plymouth based office furniture company has been convicted of breaching the Fair Trading Act in an important legal precedent which helps to define what 'New Zealand made' means.

Knights Business Furniture was convicted in the New Plymouth District Court of four breaches of the Fair Trading Act relating to advertising material that represented that four models of office chair were New Zealand made.

Although the majority of the components of the chairs were manufactured overseas, the office chairs were promoted in a brochure distributed to retailers with the words 'NZ Made' appearing beneath a stylised silver fern.

The imported components included the base, castors, gas lift, chair adjustment levers and seat and back assemblies. The Court heard that while these components had been assembled in New Zealand, the only parts of the chairs manufactured in this country were some incidental parts and the foam and upholstery for the seat and back support.

The Judge held that whether a product was New Zealand made was a question of fact and degree. In this case the New Zealand input into the chairs was not enough to justify describing them as New Zealand made. The Judge noted that the assembly in New Zealand of parts manufactured overseas could not be described as New Zealand made without creating a misleading impression.

"This is an important precedent due to the growing consumer demand for information about where products are made, and it is important for local manufacturers who quite rightly want to protect the value placed on genuinely New Zealand made products," says Commerce Commission Chair Paula Rebstock.

"In this case, the company's promotional material gave prominence to the New Zealand made claim even though there was clearly a significant overseas input into the chairs. Some consumers are happy to pay a higher price for goods that they believe to be made in New Zealand, so it is important that information about country of origin is accurate."

"Manufacturers should take care to be specific when making country of origin claims, such as being clear that a product is made or assembled in New Zealand from components or ingredients imported from another country," says Ms Rebstock.

In fining the company $5,000, the Court noted that, in this case, the offending was not likely to have had much effect on the market. Judge Ongley pointed out that there was no issue as to the quality of the chairs and the misrepresentation had not been used in media or general advertising, but was restricted to the back of the brochure distributed to retailers.
Knights Business Furniture breached Section 13(j) of the Fair Trading Act. Section 13(j) prohibits misleading representations concerning the place of origin of goods. The misleading representations were made in brochures provided to resellers.

Only the courts can give an authoritative ruling as to whether a behaviour breaches the Act and award appropriate penalties.
The four models sold by Knights Business Furniture under the Ergo brand were Evo, Form, Iso and Zed.

The four models were assembled in New Zealand using components manufactured in Taiwan, China and Italy. The foam for the seat and the back was manufactured in New Zealand.


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