Misleading NZ Made Company Fined

(PR.co.nz) A Christchurch-based company that supplies souvenir and gift shops at airports and major tourist destinations throughout New Zealand has been fined $48,000 in the Christchurch District Court today.

Prokiwi International Limited pleaded guilty to 17 representative charges of breaching the Fair Trading Act between March 2008 and May 2009 for supplying products that were packaged in a way likely to mislead customers that the products were New Zealand made when this was not true.

The Commerce Commission’s investigation into Prokiwi International’s range of soaps and skin products found that the overall impression was that range of products were genuine New Zealand made products. However, all the ingredients were sourced from Malaysia, Indonesia and China and all the products were manufactured in China.

“Prokiwi International’s company logo is a graphic of a kiwi together with the words Aotearoa New Zealand. This, combined with the names of the products, such as New Zealand Honey Hand Lotion, New Zealand Kiwifruit Lip Balm and New Zealand Lanolin Soap, and the use of iconic New Zealand images such as a bee on a manuka flower, kiwifruit and a merino ram in front of Mount Cook on the packaging, would give consumers the strong impression that they were purchasing New Zealand made products,” said Graham Gill Commerce Commission Enforcement Manager, Auckland.

Most of Prokiwi International’s soap and skincare products made no mention of the actual country of manufacture on their packaging. Although some packaging included the phrase ‘Imported and Distributed by Prokiwi International Limited’ in small light coloured print in a small font, the positioning of the phrase (usually on the base of the product) where it could not be readily seen by customers meant this was not sufficient to correct the overall impression conveyed by the packaging.

In sentencing, His Honour Judge Moran accepted that the Prokiwi International conduct was blatant, even cynical, and that the product packaging was deliberately deceptive.

Prokiwi International was convicted of two charges in respect of labelling changes which were made in response to the investigation and which had purported to address the Commission’s concerns. The changes involved replacing an ‘Imported and Distributed’ sticker with a small ‘Made in China’ sticker or with the words ‘Made in China’ in small red print. In neither case did the Commission consider the labelling changes corrected the overall misleading impression created by the extended use of New Zealand imagery. The stickers still used the image of a kiwi, and the size and colour of the print and the sticker led the Commission to the view that the changes were a minimal effort at compliance.

The judge found the attempts at compliance through the ‘Made in China’ labelling were minimal and ineffectual and stated that a further aggravating feature was that the misleading goods are still available for purchase.

“Many consumers are influenced by the country of origin of goods and this is particularly so in the case of prospective purchasers in tourist or souvenir shops where buyers are looking for a memento of their visit to New Zealand that is New Zealand made. The packaging used by Prokiwi International not only misled consumers who believed that they were buying New Zealand made souvenirs, but disadvantaged other businesses who were selling genuine New Zealand sourced and made products. The Prokiwi International products were sold at significantly lower prices alongside nearly identical competing products that were genuine New Zealand made products, unfairly giving Prokiwi International a competitive advantage,” said Mr Gill.

“Businesses must not mislead consumers about where goods are made. It is not just words that can be misleading. The use of symbols such as kiwis, flags or other iconic national emblems can also convey false or misleading impressions about where a product is made,” said Mr Gill. “Although New Zealand legislation does not require all products to be labelled with a place of origin, any claims that are made about a product’s origin must not be misleading or deceptive.”

In setting the sentence His Honour Judge Moran said that “the Act has teeth and judges are expected to bite”.

Media Release 9 August 2010 from Commerce Commission.