The Commerce Commission said today that as well as continuing its general enforcement of the Commerce and Fair Trading Acts, this year it will also focus on what it has identified as key areas.

Commission General Manager John Feil said that under the Commerce Act, the Commission will focus on the telecommunications, electricity, gas and health sectors. It also aims to have long-running court actions against Carter Holt Harvey subsidiary, INZCO, and 12 North Island meat companies come to trial in the second half of the year.

Under the Fair Trading Act, particular attention will be paid to pyramid selling, cellphone retailing, small print and guarantees and remedies.

Mr Feil said that telecommunications, electricity and gas are key areas for Commission attention because they are all major industries that include natural monopolies and without which other industries could not function.

An issue common to these three industries and central to the Commission's concerns, is the ability - or inability - of competitors to access monopolies in their industries.

The health sector has been covered by the Commerce Act since 1993. However, the Commission's contact with the sector shows that knowledge of the Act is poor.

The Commission will continue with its court action against the Ophthalmological Society and will publish information for all health organisations and professionals about how this Act applies to them. It will also meet the key participants in the industry to explain the Act to them.

Both the INZCO and meat companies cases have been before the courts since 1995 and the Commission is anxious these get to substantive hearings. These cases are of considerable interest to the Commission and the courts' decisions will help define important areas of the Commerce Act.

All pyramid selling is prohibited by the Fair Trading Act. Last year, courts imposed fines and costs totalling $29,000 against two people involved in the Black Magic pyramid selling scheme. Despite that warning from the courts, many pyramid selling schemes continue to operate in New Zealand. The Commission has developed a strategy to attack this problem and more prosecutions are likely.

Cellphone retailing is a particular concern because, in the Commission's view, breaches of the Fair Trading Act are common. It has already taken five successful court cases against cellphone retailers, it has another before the courts, and a seventh will begin soon.

As well as taking further enforcement action, the Commission will meet the cellphone network operators and trade associations to ensure that they understand the Act. This will be followed by seminars for cellphone retailers.

Small print is commonly used in advertising and promotions in all sectors, but too often it is used to substantially change, and occasionally even contradict, the overall impression created by the large print, pictures and other elements of the promotion.

In finding advertisers guilty of breaching the Fair Trading Act, courts have stated that "small print cannot save a representation from being misleading".

Last year the Commission took a precedent setting court case to define the links between the Fair Trading Act and the Consumer Guarantees Act. The Fair Trading Act prohibits false or misleading claims about rights. The Consumer Guarantees Act gives consumers rights to guarantees and remedies that must be provided. The courts found that claiming that particular guarantees or remedies were not available when they were, was a breach of the Fair Trading Act.

This year, through a mix of enforcement action and education, the Commission will promote that message. The rights set out in the Consumer Guarantees Act must be provided to consumers. Contracts, and any other representations, cannot take these rights away. And furthermore, if they try to take away these mandatory rights, then they breach the Fair Trading Act.

Background

Telecommunications

The Commission will pay particular attention to number portability, the continuing development of the Internet, radio spectrum auctions and the introduction of new technology.

Several cases are before the courts. While none of these cases were initiated by the Commission, it will watch their progress with great interest.

Electricity

The Commission's primary focus in the electricity industry is its court action against Southpower, alleging that the company breached the Commerce Act by trying to prevent competitors accessing its network of power lines.

It will also look at access to transmission lines and other facilities, and cross subsidies.

Gas

At the end of last year the Commission started court action under the Commerce Act against Fletcher Challenge Limited, Fletcher Challenge Energy and ECNZ over arrangements between them involving the Kupe field.

The Commission will continue to monitor this industry at the extraction, wholesaling, transmission and retail levels.

Health

A significant issue is the role of professional associations in providing patients with access to health services. At the end of last year the Commission started Commerce Act court action against the Ophthalmological Society and five individual ophthalmologists over their involvement in the cancellation or arrangements for Australian ophthalmologists to perform cataract operations in Invercargill.

With the continuing growth of professional associations within the health sector, the Commission is keen to focus on educating participants about the limits the Act places on their actions.

The Commission also intends to monitor changes in the sector resulting from government policy reviews.

Media contact: General Manager John Feil

Phone work (04) 498 0963

Communications Officer Vincent Cholewa

Phone work (04) 498 0920

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