The Commerce Commission just dropped a massive fine of $3.675 million on One NZ (used to be Vodafone NZ) for misleading folks with its FibreX broadband service ads.
John Small, the Commission Chair, highlights that this penalty is the largest ever under the Fair Trading Act. It aims to discourage similar conduct by other large businesses, emphasising the seriousness of One NZ's actions from 2016 to 2018.
Small pointed out the importance of truthfulness in marketing and promotions as required by the Fair Trading Act. He stated, "Every New Zealander should be able to trust what businesses say in their marketing and promotion of their services." The Act mandates that claims be accurate to provide consumers with the information needed for informed purchasing decisions.
In this case, One NZ's conduct was deemed misleading and had negative effects on consumers as well as competition within the broadband market in New Zealand, according to Dr Small.
In a High Court appeal judgment on August 11, 2023, Justice Moore supported the Commission's appeal against the initial fine from the District Court. He stressed the importance of a more substantial penalty to make an impact on One NZ and deter others. The High Court also rejected One NZ's appeal against conviction on nine original charges.
In 2021, the District Court found One NZ guilty of misleading consumers about its FibreX service. They falsely portrayed it as fiber-to-the-home (FTTH) broadband when it wasn't, and wrongly implied that FibreX was the sole broadband option at certain addresses.
Last year, One NZ got hit with a $2.25 million fine by the District Court. The Commission wasn't satisfied and appealed, saying the penalty didn't quite match up with how serious the situation was and the company's size. FibreX promotion hindered consumers from making informed broadband choices.
"One NZ's misleading portrayal of FibreX as fibre-to-the-home distorted competition, providing an unfair edge over genuine 'fibre' competitors like local fibre companies and retailers," Dr Small explains.
One NZ's actions coincided with the government's $1.5 billion investment in UFB (Ultra-fast Broadband) rollout, aimed at promoting fibre-to-the-home broadband adoption. The FibreX campaign reached about 250,000 households in Wellington, Kapiti, and Christchurch.
Check out the appeal judgment on the High Court website here.
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