Coles Myer New Zealand Holdings Ltd, which trades as Kmart, has been fined $25,000 today in the Auckland District Court on three charges of selling dangerous bicycles.

Commerce Commission Chairman Dr Alan Bollard said this is the biggest fine for a breach of a product safety standard to date.

"We are very pleased that the Court has given such a strong warning that any business selling goods covered by a product safety standard must take its responsibility seriously," Dr Bollard said.

Judge J.W.Imrie said there had been a significant degree of carelessness on the part of Kmart and a substantial penalty was appropriate.

Kmart pleaded guilty last week when charges were brought by the Commerce Commission under the Fair Trading Act.

"We pay close attention to any matter involving product safety standards," Dr Bollard said. "We will often take stronger action against a breach of a safety standard than against other breaches of the Act.

"Almost invariably it is children who are at risk because of dangerous goods, and businesses must realise the law puts the responsibility on them to make sure that their goods are not dangerous.

"Kmart was at the very least careless. It had been warned to improve its checking systems after nine out of 16 bikes inspected at its Porirua shop did not appear to meet the safety standard."

Three weeks later Commission investigators bought two bikes in Christchurch and a third in Auckland. All three were tested and all failed the bicycle safety standard.

"Whatever action Kmart took was obviously inadequate," Dr Bollard said.

Kmart was fined $10,000 on one charge and $7,500 on each of two charges.

Product safety standards made mandatory by the Fair Trading Act are those for: bicycles, toys for children aged up to three, and night clothes for children from six months to 14 years.

Media contact: Communications Officer Vincent Cholewa

Phone work (04) 498 0920, home (04) 479 1432

Background

The law

The Commerce Commission enforces the Commerce Act and the Fair Trading Act.

There are three product safety standards made compulsory by the Fair Trading Act They are for:

· bicycles

· fire safety of children's night clothes

· toys for children aged up to three years (to prevent choking)

Other recent action by the Commission includes:

· a company was fined $20,000 for two charges of selling unsafe bicycles

· a company was fined $10,000 for one charge of selling an unsafe bicycle

· a company was fined $10,555 for selling dangerous rattles

· a company was fined $6,500 for selling children's night clothes which did not meet the product safety standard

· a company was fined $4,000 for selling children's night clothes with no fire danger warning labels

· a company was fined $3,000 for making false claims about bicycles

· more than 20,000 garments were recalled because they failed fire safety standards for children's night clothes

· a chain of family restaurants entered a settlement with the Commission after giving away unsafe toys

· a toy store, part of a franchise chain, entered a settlement with the Commission after selling an unsafe toy

Education

The Commission has also put considerable effort into educating business people about the safety standards. As well as publicity, it has held seminars, visited towns where it has no office, provided speakers for conferences and has worked in particular with nation-wide traders. It also publishes a newsletter and a wide range of free pamphlets about the Acts it enforces.