1997 saw more court action being taken by the Commerce Commission, important legal precedents being set and higher penalties being imposed by courts.

Commission Chairman Dr Alan Bollard said that both Acts enforced by the Commission - the Commerce and Fair Trading Acts - have been law for more than 10 years now.

"They are not new legislation and all sectors of the economy need to be well aware of them," Dr Bollard said.

The Commission has put considerable effort into education about the Acts, and significant or repeated breaches are likely to result in court action. In addition, in areas where the law is not clear, the Commission will take court action to establish a legal precedent.

Key precedent cases were started or concluded during the year in the medical, electricity, gas, oil and food industries; and also in relation to employment advertising and the links between the Fair Trading Act and the Consumer Guarantees Act.

"Looking back over the year, I am delighted to be able to say that the Commission's staff have been thoroughly professional and, through their investigations, have provided excellent information to the Commissioners," Dr Bollard said.

The Commission resolved more than 220 matters where businesses were at risk of breaching the Acts, with warnings and settlements. It also started 28 court actions - six under the Commerce Act and 22 under the Fair Trading Act.

The highest fine to date under the Fair Trading Act increased twice, from $35,000 at the start of the year to $50,000 against Edge Computer Limited and $63,000 against Bond and Bond Limited. The maximum under this Act is $100,000.

In final settlement of the Port Nelson Limited (PNL) case under the Commerce Act, PNL paid $325,000 costs to the Commission, in addition to the $500,000 penalty plus $25,000 costs imposed by the Court of Appeal in 1996.

Under the Fair Trading Act, four cases set key precedents.

Cases against Pacific Dunlop Holdings (NZ) Limited and Enza subsidiary, Stefans Fresh Juice Company, were important for the food industry. The Pacific Dunlop case showed that a factually correct statement can still be misleading, and Stefans set guidelines for when using the word "fresh" can be misleading.

A case against the Prudential Assurance Company of New Zealand was instrumental in showing how this Act applies to misleading job advertising. The fourth key case, against PC General, was the first to test the links between the Fair Trading Act and the Consumer Guarantees Act.

"These cases have had a big impact on the development of the Fair Trading Act, and showing how it applies to businesses," Dr Bollard said.

For the first time under the Commerce Act court action was taken against a medical group, the Ophthalmalogical Society of New Zealand, and against a power company, SouthPower.

"These will be key cases in determining how the law applies to these industries," Dr Bollard said.

In addition, the Commission began court action against Fletcher Challenge Limited, Fletcher Challenge Energy and ECNZ over contracts involving the Kupe natural gas field; and Caltex, Shell and Mobil alleging anti-competitive collusion to remove a discount off the price of fuel at 50 Auckland petrol stations.

DB Breweries admitted in court that it had tried to prevent a bottle store setting its own prices for promotional packs of beer and paid a penalty of $115,000.

Following a Court of Appeal decision, Auckland Toyota dealer, Giltrap City Toyota, will face a trial to hear allegations that it was involved in price fixing. Since that decision, Giltrap has applied for leave to appeal to the Privy Council.

"The Commission's objective is compliance with the Commerce and Fair Trading Acts," Dr Bollard said. "A mixture of education and enforcement action appears to be the best way of achieving that, and will continue in 1998."

Media contact: Commerce Act Manager Jo Bransgrove

cellphone 021 630 466

Fair Trading Manager Rachel Leamy

cellphone 021 662 773

Commission media releases can be viewed on its web site www.comcom.govt.nz