We are responsible for enforcing laws relating to competition, fair trading, and consumer credit contracts, and have regulatory responsibilities in the electricity lines, gas pipelines, telecommunications, dairy and airport sectors.

We enforce the following pieces of legislation:

Fair Trading Act 1986

The Fair Trading Act is primarily concerned with trader behaviours that are likely to mislead consumers as to the price, performance or quality of their purchase. These behaviours can include anything from false claims about what a product is made from or where it comes from, through to key pricing details being hidden in fine print. The Act also includes provisions that deal with specific issues such as unfair contract terms, door-to-door sales or pyramid schemes and sets product safety rules for a number of items.

The Act allows us to issue infringement notices in certain circumstances, including to motor vehicle dealers who do not display Customer Information Notices (CIN) on vehicles for sale and for traders who fail to disclose they are a trader when selling online.

Prosecutions taken under the Fair Trading Act are filed in the District Court. Maximum penalties under the Act for most offences are $200,000 per offence for individuals and $600,000 for businesses.

The Act also gives us the power to request information and undertake compulsory interviews.

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Commerce Act 1986

The Commerce Act aims to promote competition in markets within New Zealand for the long-term benefit of consumers. It covers both business competition and market regulation.

Parts 2 and 3 of the Act: restrictive trade practices and business acquisitions

The Act prohibits restrictive trade practices including cartel arrangements (such as price fixing or restricting output), taking advantage of market power, and entering into arrangements that substantially lessen competition in a market.

We can investigate and take enforcement action relating to restrictive trade practices. Such enforcement action may include prosecution, which can be subject to pecuniary penalties of up to $500,000 in the case of an individual; or for corporates, the greater of $10 million, three times the value of any commercial gain from the restrictive trade practice, or 10% of the turnover from the period in which the practice occurred.

The Act also prohibits business acquisitions – typically referred to as ‘mergers’ – that substantially lessen competition in a market. The Act enables businesses undertaking such a transaction to voluntarily seek clearance or authorisation from us to complete the merger. If we authorise or grant clearance to complete the merger, we will not investigate it any further. However, we can investigate a completed merger that has not received clearance or authorisation, and take prosecution action if we consider the merger substantially lessens competition in a market. A prosecution can result in the Court imposing pecuniary penalties of up to $500,000 in the case of an individual, or $5 million in any other case. The Court can also direct the merger be reversed.

Market studies

In October 2018 Parliament amended the Commerce Act introducing Part 3A under which we are able to undertake competition studies of a market. Known as market studies, these are an in-depth and independent study into the factors affecting competition for particular goods or services, to find out how well competition is working and whether it could be improved.

Part 4 of the Act: regulated goods or services

Part 4 of the Act provides for the regulation of either or both of the price and maximum revenues, and quality of goods or services in markets where there is little or no competition, and little or no likelihood of a substantial increase in competition. Under Part 4, we set price-quality regulation and information disclosure requirements relating to electricity lines services and gas pipeline services. We also set information disclosure requirements relating to services at certain airports. Our current price-quality regulation involves setting maximum revenues, determining the quality standards suppliers must meet and the information they must provide to us and publicly disclose. We also publish input methodologies in order to promote certainty for suppliers and consumers as to the upfront rules, processes, and requirements that will apply when we make our price-quality regulation and information disclosure requirements.

We can also inquire into whether particular unregulated goods or services should be regulated under Part 4. Following an inquiry, we can recommend to the Minister of Commerce that the relevant goods or services be regulated if we consider that the market for the goods or services has little or no competition (and little or no likelihood of a substantial increase in competition); there is scope for the exercise of substantial market power in relation to the goods or services; and the benefits of regulating the goods or services in meeting the Part 4 purpose exceed the costs of regulation.

If a supplier of regulated goods or services breaches price-quality regulation or information disclosure requirements we have set under Part 4, we can investigate and take enforcement action. Such enforcement action includes taking proceeding in the High Court. Maximum pecuniary penalties for breaches are up to $500,000 in the case of an individual, or $5 million for corporates.

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Credit Contracts and Consumer Finance Act 2003

The Credit Contracts and Consumer Finance Act (CCCFA) sets the rules for businesses that lend money or offer finance to consumers, whether a cash loan or a contract where a purchase is paid off over time. It puts the responsibility on lenders to be certain that a borrower can afford to make the required repayments. The Act details the information lenders must disclose to borrowers or guarantors before they sign up for a loan or purchase contract and the process that must be followed to collect debt or repossess a borrower's security items. It also requires that all fees be reasonable. The Act does not regulate interest rates.

We can take civil and criminal cases under the Act, both of which are filed in the District Court.

Maximum penalties under the Act are the same as those under the Fair Trading Act ($200,000 per offence for individuals and $600,000 for businesses). In civil cases we can seek to have money returned to affected borrowers. We can also issue $1,000 infringement notices for some more minor breaches of disclosure and repossession rules.

The Government has decided to make law changes to the CCCFA, legislation is currently before parliament.

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Telecommunications Act 2001

Under the Telecommunications Act, we regulate the supply of specific telecommunications services, including mobile and broadband services. We monitor, assess, and report on competition in the telecommunications sector. We also make determinations relating to telecommunications services, such as determining the wholesale price Chorus can charge internet retailers for access to its physical broadband network and cabinet software.

We can investigate and take enforcement action where an individual or company breaches particular provisions of the Act. The same applies if an individual or company breaches our determinations, or certain undertakings or codes, under the Act. Our enforcement action can take the form of a civil infringement notice or taking proceedings in the High Court.

Maximum pecuniary penalties under the Act range from $300,000 to $10 million depending on the provision breached; or in the case of breaches of our determinations, or certain undertakings or codes, the value of the commercial gain resulting from a breach less any compensatory damages awarded.

Regulation of fibre services

In November 2018, Parliament amended the Telecommunications Act giving us several new obligations relating to telecommunications regulation. These obligations will cover both the deregulation of the copper network where fibre services are available, and the regulation of fibre services, which require us to determine a range of new regulatory settings.

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Dairy Industry Restructuring Act 2001

The DIRA regulates New Zealand's dairy market. The Act created Fonterra and aims to promote the efficient operation of dairy markets by regulating Fonterra’s activities to ensure New Zealand markets for dairy goods and services are contestable. It does so by requiring Fonterra to allow farmers supplying raw milk to Fonterra to exit and to return to supplying Fonterra if they choose. The Act also prevents Fonterra from discriminating in setting its terms of milk supply between existing shareholders and entrant shareholders. The Raw Milk Regulations made under the Act likewise require Fonterra to supply up to 600 million litres of raw milk to qualifying independent milk processors, subject to particular volume limits, at a regulated price.

Under the Act, we monitor and report on how Fonterra calculates its milk price and whether this is consistent with the efficient and contestable operation of the New Zealand dairy market. We may also determine disputes between an individual and Fonterra concerning particular matters under the Act.

The Act allows us to investigate and take enforcement action concerning potential breaches of the Act. The maximum pecuniary penalties are the same as those that apply under section 80 of the Commerce Act.

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