The Commerce Commission is reminding all electricity retailers, new and old, that claims they make about their own and competitors' services must be accurate or they risk misleading consumers and breaching the Fair Trading Act.

Commissioner Dr Kate Brown said that electricity retailers are complaining to the Commission about each other's advertising.

"For the moment we are limiting our enforcement action to an industry-wide warning that electricity retailers must understand the Act and comply with it," Dr Brown said.

"We accept that competition for smaller consumers is new to the electricity industry, but the Fair Trading Act has been law for more than 12 years and has always applied to electricity.

"Electricity is of vital importance to a modern economy - every household, every business, every community group is an electricity consumer.

"Competition in the electricity sector has the potential to immensely benefit the whole country. But for that potential benefit to become real, consumers must be given accurate information on which to base their choices.

"False or misleading information disadvantages consumers, harms competitors and distorts competition."

Electricity retailer's complaints to the Commission about other electricity retailers' advertising have focused on two issues:

* that advertisers' claims about prices and savings may be misleading; and

* that advertisers' claims about competitors may be misleading.

The Commission will be assessing these complaints under its investigation and enforcement criteria but believes it is timely to remind electricity retailers of their Fair Trading Act obligations.

The Act prohibits false or misleading claims about goods and services, and also misleading or deceptive conduct. It specifically includes electricity in its definition of goods.

"The Commission is happy to explain its role and what the law states, but it cannot give legal advice," Dr Brown said. "I strongly advise companies unsure about their position to get advice from lawyers with expertise in this Act."

Background

The Electricity Industry Reform Act passed earlier this year has given the Commission additional responsibilities in the electricity industry. It has NOT replaced the Commerce and Fair Trading Acts. Power companies must comply with all three Acts enforced by the Commission.

Media contact: Commission Member Dr Kate Brown

Phone home (03) 482 1558

Fair Trading Manager Rachel Leamy

Phone home (04) 479 6334

Communications Officer Vincent Cholewa

Phone home (04) 479 1432

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