A subsidiary of Blue Star Group, New Zealand Office Products Limited, has been fined $5,000 after admitting it breached the Fair Trading Act by making misleading claims about prices.

Judge Lance said the fine would have been larger had the company not co-operated with the Commerce Commission and made an early guilty plea, additionally, it had no previous convictions. Judge Lance also took into account that the breach occurred because the company's system failed, and a substantial compliance programme has now been put in place to help prevent future breaches.

Commerce Commission Chairman Dr Alan Bollard said that the Commission prosecuted one of the company's trading divisions, which trades as Blue Star Office Products, because of misleading claims it made in brochures twice distributed in newspapers nation-wide. The case was heard in the Auckland District Court.

Dr Bollard said that savings advertised by Blue Star Office Products were incorrect because the claimed "was" prices had either never been charged or had only been charged rarely.

The prosecutions related to misleading claims about the prices of cordless phones, workstations and computer desks.

"Misleading price comparisons has been a significant problem," Dr Bollard said. "There have been several prosecutions of other companies already, and it is disappointing that a subsidiary of the country's biggest office supply retailer has now also been prosecuted."

In this case the predecessor of Blue Star Office Products had been warned by the Commission about similar advertising. The company has now put a comprehensive compliance programme in place to prevent further breaches, but that has come after the Commission had to take court action.

Dr Bollard said that more than half of the Commission's warnings, settlements and court actions under the Fair Trading Act were against false or misleading prices. The highest fine to date under the Act, $63,000, was imposed earlier this year on a company which made a series of misleading claims about its prices.

"Price usually plays a significant part in customers' buying decisions and it is important that the information they receive is accurate," Dr Bollard said.

"In addition, if a major player in a market uses false or misleading advertising, then it can force other businesses to follow suit so that they can compete with it.

"The Act protects not only customers from false or misleading information, it also protects competitors."

Claims about prices are an area on which the Commission focuses particular attention. It will continue to do so, and repeated or significant breaches of the Act may led to further prosecutions.

Media contact: Fair Trading Manager Rachel Leamy

Phone work (04) 498 0908

Communications Officer Vincent Cholewa

Phone work (04) 498 0920

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