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Unfair Commercial Practices

Media Release Commercial Practices Hero

MEDIA RELEASE 24 September 2019

MTA says the Government’s plan for addressing unfair commercial practices is a step in the right direction but is too restrictive on the value of contracts it covers.

The Government today announced it will prohibit conduct that is ‘unconscionable’ – ie far beyond what is commercially necessary or appropriate. It also intends to give business contracts the same protections provided in standard consumer contracts, providing the value of the contract is below $250,000.

MTA Chief Executive Craig Pomare says “Most of the businesses in the motor trades are small companies that fix, fuel, buy, sell and supply parts to the nation’s vehicles. It is not uncommon for the big suppliers to impose quite arbitrary terms in their contracts and allow no, or very little, room for negotiation. This change to the law will require the big national and global suppliers to operate more fairly and openly.”

However, MTA is concerned by the cap of $250,000 saying this is too low for businesses selling new vehicles, buying bulk fuel, or carrying out insurance paint and panel repairs. “These are high-value transactions that are likely to amount to much more than $250,000 per year.”

He says the intent behind the law change may be enough to change the behaviour of those large companies that take advantage of their power. “But if it doesn’t, we would like to see the Commerce Commission resourced to carry out investigations, speak publicly about bad actors, and prosecute when necessary.”