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The Spinoff
3 days ago
- Business
- The Spinoff
When big companies face criminal charges, what does it actually mean?
Noel Leeming is the latest big retailer to be criminally prosecuted by the Commerce Commission. But what do the charges actually mean, and will they make a difference to uncompetitive or unfair behaviour? Last week, the Commerce Commission announced it was filing criminal charges against Noel Leeming in the Auckland District Court. The government's consumer watchdog claimed the electronics chain, which is owned by The Warehouse, had breached the Fair Trading Act, particularly in its 'price match' guarantee; often, according to the commission, products from other companies will not be matched, despite Noel Leeming advertising that they will. 'It's crucial that businesses promoting any price match offer factor in the overall impression of the claims they make, and that all information is clear to customers,' said Anne Calliman, the deputy chair of the Commerce Commission, in a press release. It's not the first time the commission has filed criminal charges against retailers: Woolworths NZ, and some specific Pak'n'Save supermarkets (which are operated under a franchise model) were served with criminal charges last December for alleged breaches of the Fair Trading Act, while civil proceedings were filed against Foodstuffs North Island and Gilmours last week for alleged cartel conduct in breach of the Commerce Act. But what punishments can really be handed out? And does being served with criminal charges make a difference to how companies operate? What is the Commerce Commission? Great, starting with an easy one. The commission, also known as the CommComm (cute!), is New Zealand's competition, consumer and regulatory agency. An independent Crown entity, it's responsible for enforcing a few different laws. Under the Commerce Act, the commission can conduct market studies into competition, investigate mergers between businesses which may reduce competition and harm consumers, and recommend that particular goods or services are regulated if there is little competition. If people have been engaging in cartel conduct (ie price fixing or bid rigging), the commission can bring civil charges under the Commerce Act, with penalties including fines of up to $500,000 for an individual and $10 million (or more) for a company. As of 2021, it can also bring criminal charges under this law which could lead to imprisonment of up to seven years for individuals. Under the Fair Trading Act (FTA), the commission can investigate and prosecute companies and individuals for misleading pricing, including contract terms and pyramid schemes. It can file criminal charges through the District Court, with fines of up to $200,000 per offence for individuals and $600,000 per offence for companies. The commission also enforces some parts of the Telecommunications Act (how people are charged for internet and phone services), the Dairy Industry Restructuring Act (how Fonterra charges for raw milk) and and the Credit Contracts and Consumer Finance Act (money lending). People can report companies for suspected breaches of these acts, and the commission can respond by investigating and potentially filing civil or criminal charges. So the Commerce Commission can't investigate or prosecute 'high prices' – it has to have a specific example of someone breaking the law? Yeah, exactly. It might feel wrong that butter costs $11 – but a breach of the Fair Trading Act would be a misleading special, like butter being advertised as on special for $11 if that was actually the standard non-discounted price, or a shopper being charged $11 when the price tag said $10. Examples of this gathered by independent organisation Consumer and submitted to the ComCom led to Pak'nSave and Woolworths receiving criminal charges. What's the difference between civil and criminal charges? Whether civil or criminal charges are brought will depend on the particular legislation and all the circumstances of the conduct. Where there is a choice between the two, the commission will consider a range of factors including the standard of proof required (civil cases must be proved on the 'balance of probabilities' standard, but criminal cases require proof 'beyond reasonable doubt'), the seriousness of the conduct and its consequences and whether the conduct was deliberate or especially blameworthy. Are there any recent examples of companies actually having to pay big fines? Several. Last year, Kiwibank was found to have overcharged 35,000 customers by more than $6.8m, in breach of the Fair Trading Act. Kiwibank found the issues in its system and turned itself into the commission, which brought 21 criminal charges and the bank was fined $1.5m, as well as repaying the customers $9.2m to remediate. In a civil case last year, meanwhile, Foodstuffs North Island was fined $3.25m under the Commerce Act for using land covenants to block its rivals, and in 2023, One NZ copped a $3.6m fine under the Fair Trading Act for misleading customers about fibre broadband. Has the Commerce Commission ever actually sent someone to prison? Not yet, but in December last year, the High Court handed down its first criminal sentence for charges brought by the Commerce Commission under the Commerce Act, to Manesh Kumar, who rigged bids for NZTA projects. He received a sentence o f six months of community detention and 200 hours of community service. Despite the term 'criminal charges', this doesn't usually lead to lawyers yelling at each other across a courtroom, holding up different pictures of price specials available at supermarkets. Many Commerce Commission cases are settled, with the company at fault agreeing to pay a fine and not engage in the bad behaviour again. I've lost count of the articles I've read about how unfair and expensive the grocery sector is. Can the Commerce Commission make much of a difference to the fact that getting a few things for dinner always ends up costing $80? After a market study in 2022 showed that New Zealand needed more competition in the grocery sector to get better prices, the Grocery Industry Competition Act was passed by the government. Since 2023, the Commerce Commission has had a specific grocery commissioner. Yet the high prices, and the depressing headlines, continue. The commission has said that the grocery sector is one of its priorities for 2024/25. It hasn't just focused on supermarkets, but also alternatives, like filing criminal proceedings under the FTA against meal subscription company Hello Fresh for not telling customers that accepting a voucher meant they were resubscribing to the service. It's said the rules need to change so that smaller companies that sell groceries have more alternatives. But because there is so little competition in the sector, all these court cases and call-outs have made little difference. The Commerce Commission can only regulate the commercial sector as it is, not change the system as a whole. Finance minister Nicola Willis has said that breaking up the duopoly of Woolworths and Foodstuffs might be an option. 'Significant action may be required to foster genuine competition,' she said in March. For now, however, criminal charges or otherwise, the status quo remains.
RNZ News
5 days ago
- Business
- RNZ News
Supermarkets still making pricing errors
Consumer NZ says supermarkets are still making pricing errors, despite increasing pressure and scrutiny on them. This week the consumer watchdog has been calling for harsher penalties for breaches of the Fair Trading Act. Money correspondent Susan Edmunds spoke to Melissa Chan-Green. Tags: To embed this content on your own webpage, cut and paste the following: See terms of use.
Otago Daily Times
5 days ago
- Business
- Otago Daily Times
Supermarket pricing errors to be wary of
By Susan Edmunds of RNZ Consumer NZ says supermarkets are still making pricing errors, despite increasing pressure and scrutiny on them. Charges have been filed and a number of supermarkets have pleaded guilty to breaching the Fair Trading Act due to inaccurate pricing and misleading specials. But Consumer NZ says misleading specials are still costing shoppers tens of millions of dollars a year and has launched a petition calling for tougher penalties for breaches of the act. It provided examples of a number of ways that people could be caught out by misleading signage in supermarkets. Dodgy multibuy A dodgy multibuy refers to a situation where the individual price and the multibuy price don't add up to a saving. Consumer NZ pointed to this mince special where a tray of meat was $4 or people could buy three for $20. In another case, packaging seemed to be making a confusing difference. Two individual backs of Gingernuts were selling for $5 but the club price for a 500g twin-pack was $5.59. Different pricing Sometimes the price on the shelf tag does not match what you pay at checkout. In this case, supplied by Consumer, the price tag on the shelf said $27, but the customer paid more than $35 at the checkout. Confusing Sometimes it's just hard to work out what the price is. Consumer provided an example of double cream brie was "reduced" to $10.60 for a quick sale - or was it on sale for $9.80? Mismatches Sometimes it seems as though there are multiple labels for the same item. In this case, two signs had two different prices for a single avocado. "One said $1.69. The other said $1.99," Consumer NZ spokesperson Abby Damen said. "The customer was charged $1.99. She returned two days later to ask what could be done about the pricing error. She was offered a refund of the price difference but after pointing out the supermarket's new refund policy, she was refunded $2 and also kept her avocado." Chief executive at Consumer Jon Duffy said anyone who was charged more than the shelf price was entitled by law to a refund of the difference. He said both supermarket chains promised a full refund in that scenario, but consumers sometimes had to know that was what was available. A Foodstuffs spokesperson said with more than 14,000 products in a typical supermarket, and prices changing frequently due to supplier costs, promotions or new product liens, pricing was a complex job. "But for our customers, it's simple. They rightly expect the price on the shelf to match what they pay at the checkout," he said. "We take pricing accuracy as seriously as health and safety, aiming for zero errors. "Across our local, family-owned stores, we manage tens of thousands of price labels and process millions of transactions every week, and we've invested in better systems, daily checks and electronic shelf labels to help get it right. "If we do get it wrong, our policy is that the customer gets a refund and keeps the product. We've also strengthened staff training and store processes to make sure pricing is clear and accurate." Woolworths said it had more 3.5 million transactions in our stores each week "and sometimes errors do occur". "When they do, we try to make things right, through our long-standing and market-leading refund policy. Under that policy, if a customer is charged more than the advertised price for a product, they get a full refund and can keep the product." Duffy said Consumer had received 20 complaints about supermarket pricing since Tuesday. A normal rate would be two a day, he said.
Otago Daily Times
5 days ago
- Business
- Otago Daily Times
Four common supermarket price errors to look out for
By Susan Edmunds of RNZ Consumer NZ says supermarkets are still making pricing errors, despite increasing pressure and scrutiny on them. Charges have been filed and a number of supermarkets have pleaded guilty to breaching the Fair Trading Act due to inaccurate pricing and misleading specials. But Consumer NZ says misleading specials are still costing shoppers tens of millions of dollars a year and has launched a petition calling for tougher penalties for breaches of the act. It provided examples of a number of ways that people could be caught out by misleading signage in supermarkets. Dodgy multibuy A dodgy multibuy refers to a situation where the individual price and the multibuy price don't add up to a saving. Consumer NZ pointed to this mince special where a tray of meat was $4 or people could buy three for $20. In another case, packaging seemed to be making a confusing difference. Two individual backs of Gingernuts were selling for $5 but the club price for a 500g twin-pack was $5.59. Different pricing Sometimes the price on the shelf tag does not match what you pay at checkout. In this case, supplied by Consumer, the price tag on the shelf said $27, but the customer paid more than $35 at the checkout. Confusing Sometimes it's just hard to work out what the price is. Consumer provided an example of double cream brie was "reduced" to $10.60 for a quick sale - or was it on sale for $9.80? Mismatches Sometimes it seems as though there are multiple labels for the same item. In this case, two signs had two different prices for a single avocado. "One said $1.69. The other said $1.99," Consumer NZ spokesperson Abby Damen said. "The customer was charged $1.99. She returned two days later to ask what could be done about the pricing error. She was offered a refund of the price difference but after pointing out the supermarket's new refund policy, she was refunded $2 and also kept her avocado." Chief executive at Consumer Jon Duffy said anyone who was charged more than the shelf price was entitled by law to a refund of the difference. He said both supermarket chains promised a full refund in that scenario, but consumers sometimes had to know that was what was available. A Foodstuffs spokesperson said with more than 14,000 products in a typical supermarket, and prices changing frequently due to supplier costs, promotions or new product liens, pricing was a complex job. "But for our customers, it's simple. They rightly expect the price on the shelf to match what they pay at the checkout," he said. "We take pricing accuracy as seriously as health and safety, aiming for zero errors. "Across our local, family-owned stores, we manage tens of thousands of price labels and process millions of transactions every week, and we've invested in better systems, daily checks and electronic shelf labels to help get it right. "If we do get it wrong, our policy is that the customer gets a refund and keeps the product. We've also strengthened staff training and store processes to make sure pricing is clear and accurate." Woolworths said it had more 3.5 million transactions in our stores each week "and sometimes errors do occur". "When they do, we try to make things right, through our long-standing and market-leading refund policy. Under that policy, if a customer is charged more than the advertised price for a product, they get a full refund and can keep the product." Duffy said Consumer had received 20 complaints about supermarket pricing since Tuesday. A normal rate would be two a day, he said.
RNZ News
5 days ago
- Business
- RNZ News
Four common supermarket price errors to look out for
Foodstuffs and Woolworths say they both have full refund policies. Photo: RNZ / Cole Eastham-Farrelly, Simon Rogers Consumer NZ says supermarkets are still making pricing errors, despite increasing pressure and scrutiny on them. Charges have been filed and a number of supermarkets have pleaded guilty to breaching the Fair Trading Act due to inaccurate pricing and misleading specials. But Consumer NZ says misleading specials are still costing shoppers tens of millions of dollars a year and has launched a petition calling for tougher penalties for breaches of the act. It provided examples of a number of ways that people could be caught out by misleading signage in supermarkets. A dodgy multibuy refers to a situation where the individual price and the multibuy price don't add up to a saving. A mince special where a tray of meat was $4 or people could buy three for $20. Photo: supplied Consumer NZ pointed to this mince special where a tray of meat was $4 or people could buy three for $20. In another case, packaging seemed to be making a confusing difference. The Gingernuts that were selling for $5 but the club price for a twin-pack was $5.59. Photo: supplied Two individual backs of Gingernuts were selling for $5 but the club price for a 500g twin-pack was $5.59. Sometimes the price on the shelf tag does not match what you pay at checkout. A box of Coca Cola a customer paid more at checkout for than the shelf price tag. Photo: Supplied In this case, supplied by Consumer, the price tag on the shelf said $27, but the customer paid more than $35 at the checkout. Sometimes it's just hard to work out what the price is. Double cream brie with two prices. Photo: supplied Consumer provided an example of double cream brie was "reduced" to $10.60 for a quick sale - or was it on sale for $9.80? Sometimes it seems as though there are multiple labels for the same item. In this case, two signs had two different prices for a single avocado. A sign saying a single avocado is $1.99. Photo: supplied Another sign at the same supermarket saying a single avocado is $1.69. Photo: supplied "One said $1.69. The other said $1.99," Consumer NZ spokesperson Abby Damen said. "The customer was charged $1.99. She returned two days later to ask what could be done about the pricing error. She was offered a refund of the price difference but after pointing out the supermarket's new refund policy, she was refunded $2 and also kept her avocado." Chief executive at Consumer Jon Duffy said anyone who was charged more than the shelf price was entitled by law to a refund of the difference. He said both supermarket chains promised a full refund in that scenario, but consumers sometimes had to know that was what was available. A Foodstuffs spokesperson said with more than 14,000 products in a typical supermarket, and prices changing frequently due to supplier costs, promotions or new product liens, pricing was a complex job. "But for our customers, it's simple. They rightly expect the price on the shelf to match what they pay at the checkout," he said. "We take pricing accuracy as seriously as health and safety, aiming for zero errors. "Across our local, family-owned stores, we manage tens of thousands of price labels and process millions of transactions every week, and we've invested in better systems, daily checks and electronic shelf labels to help get it right. "If we do get it wrong, our policy is that the customer gets a refund and keeps the product. We've also strengthened staff training and store processes to make sure pricing is clear and accurate." Woolworths said it had more 3.5 million transactions in our stores each week "and sometimes errors do occur". "When they do, we try to make things right, through our long-standing and market-leading refund policy. Under that policy, if a customer is charged more than the advertised price for a product, they get a full refund and can keep the product." Duffy said Consumer had received 20 complaints about supermarket pricing since Tuesday. A normal rate would be two a day, he said. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
