"Our routine inspection programme and the prosecution of these cases continues to be a priority for the commission because they are about the safety of young children," fair trading general manager Vanessa Horne said.
"It's important that toy suppliers to the New Zealand market understand and meet their legal obligations so children are not at risk of serious harm."
The commission said despite being labelled for children over the age of 3, it was clear the toy was designed for use by children 36 months and under because of its size and weight, bright and vibrant colours.
The toy was similar to the Thomas the Tank Engine brand - but the commission understood it was not an official, licensed Thomas the Tank Engine branded product.
During sentencing in the Manukau District Court, the judge said the offending could only be assessed at the reasonably high level as high carelessness bordering on recklessness.
It's the second time that 1st Mart has fallen foul of the Product Safety Standard for children's toys.
The toy wholesaler was fined $45,000 in 2019 for supplying an unsafe pig toy that resembled the Peppa Pig brand.
The toy had various small parts that became separated, including the pig figure, its ears, wheels and axles, which presented a choking hazard to young children.
The commission said retailers had to ensure that the toys they were selling met the requirements of the Product Safety Standard.
