Businesses wise to pay attention to ComCom 2019/20 priorities

The Commerce Commission (NZCC) has released Priorities 2019/20 – important reading for all New Zealand businesses as it reveals the NZCC’s areas of focus for the next year.

A copy is available here.

As stated by the NZCC’s Chair, Anna Rawlings, at this month’s 2019 Competition Matters conference, the NZCC has grown significantly in recent years – both in size as well as functions, powers and duties. In addition, nearly all of the legislation that the NZCC administers or enforces is under review or major changes are coming, such as criminalisation of cartel conduct, discussed below.

What are the NZCC’s priority areas?

Some of the NZCC’s priorities for 2019/20 are ‘enduring priorities’ while others reflect a particular focus for the upcoming year. The enduring priorities are those areas that will always be prioritised by the NZCC due to their significance for consumers, businesses or markets, or due to the NZCC’s core statutory role.

NZCC’s other focus areas are those chosen to be targeted each year which are assessed to be important to everyday life and the economy.

The key enduring priorities are:

  • credit issues
  • product safety and construction cases
  • cartel and anti-competitive conduct with the potential to significantly impact consumers and markets
  • mergers, both those that are notified and those that are not, and
  • NZCC’s functions in critical infrastructure industries, such as telecommunications, energy and airports.

The focus areas for 2019/20 are:

  • motor vehicle financing and related add-ons
  • environmental claims
  • online retail
  • educating traders on the cartel laws
  • consulting on and completing the market study on the retail petrol and diesel fuel sector
  • resetting the five-year revenue limits and quality standards for electricity networks
  • monitoring and reporting on telecommunications retail service quality, and
  • consulting on and finalising decisions on the new up-front regulatory rules for fibre broadband services.

Which areas of focus are new?

The NZCC’s new focus on motor vehicle financing and related add-ons follows the NZCC’s work on motor vehicle sales in 2018/19. This will involve looking at financing and related add-ons, such as insurance and mechanical warranties, but especially on compliance with consumer credit laws. The focus is a result of the NZCC’s own complaints data, as well as overseas studies, indicating that potential compliance issues exist in this area. The NZCC will seek to understand the issues, identify current and potential harm, educate traders, empower consumers and take enforcement action where needed.

Environmental claims are a renewed area of focus for the NZCC as issues in this area are quickly becoming increasingly important to consumers and to the economy. This renewed focus comes after the ACCC, Australia’s competition and consumer regulator, was recently unsuccessful in actions it brought against Kimberly-Clark for claims that its wipes were ‘flushable’ and Woolworths for claims that its ‘W Select eco’ products were ‘Biodegradable and Compostable’. The NZCC has said it will be educating businesses to ensure that claims about the environmental impact of products are accurate and can be relied on by consumers. The NZCC is likely to seek increased transparency from traders marketing products touting environmental claims, both in terms of the price charged and the claims made.

The NZCC will be seeking to increase trader awareness about conduct that may contravene cartel laws and penalties that apply. This is significant for businesses ahead of the introduction of criminalisation in 2021, to ensure that businesses in New Zealand are ready for the implementation of the law when it takes effect.

The NZCC’s retail fuel market study is the first market study undertaken by the NZCC. For the past year, the NZCC has sought to better understand the market and key aspects of supplier performance, as well as analysing whether there are competition issues in the retail petrol and diesel fuel sector. The release of the draft report is scheduled for August 2019, and the final report is to be published later this year.

Our view

As with Priorities 2018/19, almost half of the NZCC’s Priorities 2019/20 focus areas are in the consumer and credit arena. This signals that the NZCC will continue its approach to better inform consumers and educate or take enforcement action against businesses where consumer harm is occurring.

Businesses must devote time to compliance with consumer laws, or they will risk investigation and enforcement action. Time taken to ensure accuracy of claims, across the multitude of traditional and online media, that claims are backed with appropriate supporting information, and required disclosures are made, will be time well spent. Businesses should also monitor trends in the complaints they receive as systemic complaints are likely to draw the NZCC’s attention and need to be properly addressed.

Businesses should also take note of enforcement action taken by the ACCC and any ACCC priorities related to their industry because the NZCC continues to observe the actions taken by the ACCC and its priorities when considering its focus areas in New Zealand.

Changes to the Credit Contracts and Consumer Finance Act 2003 (CCCFA) will bring in a “fit and proper person” test for senior management, and new duties for directors and top executives of lenders to ensure that lenders comply with the CCCFA from 1 March 2020. This will mean that senior management may become liable for CCCFA breaches, enhancing the NZCC’s powers to enforce compliance. Directors and top executives of businesses should take proactive action to educate themselves about their new duties and obligations under the new amendments to ensure that their businesses meet the requirements of the CCCFA.

What next?

If you have any questions in relation to Priorities 2019/20 or want to understand more about how issues are relevant for your business, please contact one of our experts.

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