Christchurch company Mi Woollies Limited has been convicted and fined $63,000 in the Christchurch District Court after pleading guilty to ten charges of breaching the Fair Trading Act (FTA). The charges, brought by the Commerce Commission, relate to false or misleading country of origin claims by Mi Woollies on its “UGG New Zealand” branded sheepskin footwear.

The swing tags and labels on the outside of the footwear were misleading as they implied that the footwear was made in New Zealand when it was not. The footwear was in fact manufactured entirely in China.

The Commerce Commission began an investigation into Mi Woollies after receiving complaints, from a consumer and a competitor of the company.

Judge MacAskill noted in his sentencing that it was clear Mi Woollies calculatedly and blatantly set out to mislead consumers and that the conduct intended to subvert the objectives of the Fair Trading Act.

Commerce Commission Head of Investigations, Ritchie Hutton says the Commission is particularly concerned about this infringement of the FTA as a significant premium is attached to New Zealand made goods. In this instance, the UGG New Zealand brand of sheepskin footwear is sold through a nationwide network of retailers, including gift and souvenir stores.

“Sheepskin products have a particularly strong association with New Zealand which makes it more likely for buyers to believe a sheepskin product is made in New Zealand if the labelling creates that impression,” said Mr Hutton.

“Representing footwear as made in New Zealand when it wasn’t undermines fair competition and unfairly disadvantages other traders. It can also harm the New Zealand tourism industry. Tourism New Zealand has heavily invested in its “100% Pure” brand and misrepresentations such as this have the potential to harm the efforts of Tourism New Zealand to drive sustainable growth for the New Zealand market.”

The $63,000 fine is significantly less than the penalty sought by the Commission. The Commission is currently considering the judgment.

The Commission has previously investigated Mi Woollies for alleged country of origin breaches. A 2005 and 2007 investigation resulted in the Commission issuing a warning letter and a 2008 investigation resulted in Mi Woollies agreeing to a settlement with the Commission.

Background

The Fair Trading Act 1986 is designed to protect consumers and make competition more effective. If competition is to be effective, consumers need to be able to rely on the information provided by companies about the goods and services they offer.

False or misleading representations can distort competition and a competitive advantage can be gained by using unfair methods. The Commission is responsible for enforcing the Fair Trading Act. You can read more about the Fair Trading Act and County of Origin claims on our Place of Origin Representations page.