Commerce Commission: ready to rumble in 2022

With increased yearly funding on the horizon that will almost double between 2021 and 2024, we expect to see a higher level of enforcement action by the Commission. But where will it focus its attention? While the Commission is yet to release its specific priorities for 2022/2023, we make our predictions on the hot topics for next year:

Credit-related enforcement

Credit-related enforcement particularly for the new regime which came into force on 1 December 2021, include the requirement that directors and senior managers exercise due diligence, the new suitability and affordability regulations and the duty to provide disclosure about debt collection. These are complex requirements which require lenders to pay detailed attention to their operations to ensure they are not caught out.

The amendments were initially set to come into force on 1 October 2021, however, the amendments were delayed due to the disruption caused by the recent lockdowns across New Zealand. Instead they came into force on 1 December 2021 (except for chapter 12, which comes into force on 1 February 2022). The Government considered the delay necessary due to the impact on lenders’ implementation of the amendments, that had the effect of disrupting training and other preparations and forced a reprioritisation of lenders’ resources to support existing customers. Although time was extremely tight even for the December deadline (especially given the last minute guidance issued by the Commission in September), we expect the additional time lenders had to finalise their systems following this delay will mean the Commission will take a proactive approach to monitoring compliance with the amended provisions, in particular the new duty for directors and senior managers of consumer lenders to exercise due diligence to ensure compliance with CCCFA. We expect that the Commission will be on the lookout for suitable cases to prosecute, to deter, and also to obtain useful guidance from the courts.

Unfair contract terms

The unfair contract terms regime has been extended to include certain business to business contracts worth less than $250,000 per year. This change will come into effect in August 2022 via the Fair Trading Amendment Bill. A term in a low value business-to-business contract will be unfair if the term:

    1. would cause a significant imbalance in the parties’ rights and obligations arising under the contract;
    2. is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and
    3. would cause detriment (whether financial or otherwise) to a party if it were applied, enforced, or relied on.

Given the one-year delay from Royal Assent to the date these provisions come into force, it is likely this will be a matter of focus for the Commission, who we anticipate will take a firm stance on compliance. Only the Commerce Commission can seek a declaration that a term is unfair (rather than a contractual counterparty). Before these amendments come into force, those who rely on standard form contracts will need to review and update their contracts to ensure they are not caught out by this extension.

There is also a new prohibition on unconscionable conduct which is designed to cover serious misconduct which goes far beyond what is commercially necessary or appropriate. A breach of this provision carries a maximum fine of $600,000 for businesses and $200,000 for individuals. This is obviously a high threshold and so we do not expect this will make much difference to businesses who have good procedures and policies in place and clear expectations of employees including marketing teams.

Substantiation of claims

Since the prohibition on making unsubstantiated representations came into force on 17 June 2014, there have been only 18 investigations by the Commission under this provision. There are currently no open cases on the Commission’s books regarding unsubstantiated representations. With little judicial guidance, the Commission will be looking closely for some example cases to pursue. A representation is unsubstantiated if the person making the representation does not, when the representation is made, have reasonable grounds for the representation, irrespective of whether the representation is false or misleading. It does not matter if substantiation is later found to corroborate the statement, what matters is whether that information was held by the person making the representation at the time the representation was made.

A higher degree of substantiation is required for claims around health benefits, claims that are difficult for consumers to evaluate or that purport to be backed up by scientific research. We expect this will be an area closely monitored by the Commission particularly in the context of the global pandemic.

The Commission has previously commented that it would be pragmatic in its approach to its enforcement during COVID-19 lockdowns, but we expect to see a renewed focus from the Commerce Commission on substantiation of claims once the COVID-19 crisis has abated. For 2022, as a practical risk management action, we recommend documenting the steps taken in the due diligence process to substantiate any representations, the date the information was obtained, the source of information relied on, who in your organisation reviewed the information, and (for scientific claims) the qualification of personnel interpreting results. For larger companies, it is also prudent to facilitate critical information flow between marketing, legal and product development teams and ensure a standardised process is in place for due diligence and audit to ensure all claims are substantiated.


Cartels are always a priority focus for the Commission, but with the criminalisation of cartel conduct in April 2021, the Commission will be looking to bring its first prosecution for cartel conduct as soon as there is an appropriate case.

Read MinterEllisonRuddWatts' Litigation Forecast

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