The Commerce Commission has warned tour operators that trying to enforce recommended commission rates would, in the Commission's view, breach the Commerce Act.
Warning letters have been sent to the Inbound Tour Operators Council (ITOC), New Zealand Bus and Coach Association (NZBCA) and New Zealand Tour Drivers' Guild (NZTDG).
Commission Chairman Dr Alan Bollard said the Act prohibits price fixing - competitors reaching agreements among themselves about prices.
In this case, the groups' recommended industry standards include a 5 percent to 15 percent range for commissions. A commission would be paid by retailers and other tourist businesses, for example bungy jump operators and cafes, to tour operators who bring tourists to the businesses.
Dr Bollard said it is important to note that the Commerce Act does not prohibit the payment of commissions. It does prohibit competitors working together to agree on the amount of commission they will charge.
As trade associations, ITOC, NZBCA and NZTDG can recommend prices to their members, but the Act does not allow them to make any attempt to enforce the recommended prices.
"How much, if any, commission is paid should be negotiated between the business and the tour operator," Dr Bollard said. "Any arrangement where competitors agree on rates of commission, or work together to try to make others accept standard rates is a form of price fixing and is illegal."
If an association's rules or standards are found to breach the Act, then not only the association but also its individual members could face court penalties.
The Commission is satisfied that this case has gone no further than ITOC, NZBCA and NZTDG recommending a suggested set of industry standards for tourist operators.
"We are warning them that if the standards are used in their current format and any attempt is made to enforce the recommended commission rates then they risk breaching the Commerce Act," Dr Bollard said.
The Commission has previously investigated a similar arrangement by a group of tour operators known as PA Tours. In that case a standard 15 percent commission was proposed. That investigation ended with PA Tours entering a settlement with the Commission and giving signed undertakings that it would not try to enforce standard commission rates.
