GST price hike warning for Fairfax

The Dominion Post newspaper. Photo / Wikimedia images/ posted by user DO'Neil

New Zealand's biggest media group has been issued a formal warning by the Commerce Commission about misleading its customers over the recent GST hike.

The government regulator said Fairfax told readers that an increase in the cost of one of its publications was 'forced' by the rise in GST, when this was not the case.

The Dominion Post told readers about the increase of its weekday edition from $1.50c to $1.60c on its front page on October 1.

The GST increase alone would have resulted in a new price of $1.53, the Commission said.

"When contacted by the Commission the company accepted the notice was incorrectly worded and in fact the 10 cent price increase included its annual scheduled price increase, which had been delayed from June 2010," the Commission said.

The Commerce Commission said it had issued a formal warning to Fairfax, the first in relation to the GST increase.

Consumer lobby group Consumer NZ has set up an online "GST Wall of Shame" where it highlights companies that have taken advantage of the GST rate rise to sneak in other price increases.

The Commerce Commission's enforcement manager for Auckland, Graham Gill said consumers were entitled to expect accurate information when they bought goods or services.

"The Commission had earlier issued advice to businesses not to misrepresent the GST increase and it appears that message either did not get through or was ignored by some."

Businesses could increase their prices whenever they liked, for any reason.

However, the reason for the price increase must not be misleading, Gill said.

"To claim that an increase in price is due to the increase in GST, when the increase is far greater than the cost of the GST rise, is potentially a breach of the Fair Trading Act," said Gill.

"Some businesses are choosing a price that is different from the GST increase to ensure that a price is practical, particularly for goods that are often paid for by cash. However, they need to ensure that any reason given is clear and accurate."

The Commission said earlier this week it had received more than 30 complaints from people who believed they have been ripped off by businesses using GST as an excuse to charge higher prices since the 2.5 percentage point rise on Friday.

The majority of GST related complaints had been assessed as either unlikely to breach the Fair Trading Act, or had not met the Commission's enforcement criteria, the Commission said.

The Commission has four other GST cases currently under investigation.

The Commission said it would "continue to monitor the situation, and assess complaints received, and may take further action against businesses that continue to misrepresent the GST increase in the future".

- NZ HERALD ONLINE


See the full Commerce Commission news release here.