2021 Litigation Forecast - Commerce Commission: Ready to educate and enforce

The Commerce Commission has been firmly set in enforcement mode for a number of years. With substantive changes to some of the key legislation that the Commission administers due to come into force in 2021, we expect the continuation of an active regulator ready to educate and enforce.

In addition to the Commission’s enduring priorities that include product safety, credit issues, cartel and anti-competitive conduct and mergers, and regulation of critical infrastructure industries like energy and telecommunications, we predict the Commission will be focused on five key areas in 2021.

The Commerce Commission looks set to focus on five key areas in 2021.

Travel-related breaches

2020 saw a record level of travel-related complaints to the Commerce Commission, largely due to COVID-19. Of the 9,892 complaints received between July 2019 and 30 June 2020, 1,225 related to travel. The Commission uses complaints to help prioritise its work and identify the issues that are likely to impact consumers and markets the most. We anticipate that investigations and enforcement action in this area will follow. Travel complaints covered themes such as: difficulty obtaining refunds; offers of credits rather than refunds; and new contract terms inserted in contracts providing for cancellation fees to be charged.

Environmental claims

Consumers are increasingly considering the environment when making purchasing decisions with many prepared to pay a premium for products that are environmentally friendly. In recognition of this, we saw the Commission release guidelines in July 2020 to help businesses understand their obligations when making environmental claims. With these Guidelines now in place, we expect prosecutions in relation to “Green Marketing” claims to follow in 2021.

Pricing representations

As expected, pricing representations have received ongoing scrutiny from the Commerce Commission in the past couple of years, with enforcement action pursued against a number of entities in 2019 and 2020 where pricing claims have been false or misleading. The Commission’s November 2020 media release alerting consumers to misleading bargains on offer highlights the Commission’s concerns. We expect the Commission to be active in this area in the year ahead with enforcement action set to continue.

Supporting economic recovery

The Commission has acknowledged that as the effects of COVID-19 bring uncertainty to markets, aspects of its work will be particularly significant in helping to safeguard the integrity of competitive markets. The Commission has confirmed that it will do this by educating industry about their competition law obligations and taking action against businesses that unlawfully reduce or remove competition.

Enforcing limits on the fees and interest that can be charged on high-cost consumer credit contracts

On 1 June 2020, restrictions on high-cost lending under the Credit Contracts and Consumer Finance Act (CCCFA) came into force. The restrictions include caps on the interest and fees that can be charged on high-cost loans and restrictions on making high-cost loans to certain repeat borrowers. The Commission has developed guidance to explain the changes and is poised to follow with enforcement action against those who breach the new provisions.

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