In Commerce Commission v NZME Advisory Ltd [2023] NZHC 3425 the Commerce Commission successfully appealed against a sentence imposed on NZME Advisory Ltd (NZMEAL) for breaching an unsafe goods notice. Through its subsidiary GrabOne, NZMEAL had sold ‘Buckyball magnets’, a DIY puzzle toy. Sale of the magnets was prohibited by the Unsafe Goods (Small High-Powered Magnets) Indefinite Prohibition Notice 2014.

A useful list of product safety sentencing decisions, provided to the High Court by the Commerce Commission, can be found at Appendix A of the judgment.

The Commerce Commission v NZME Advisory Ltd decision is important because it recognises that District Court penalties have not kept pace with inflation and that it was appropriate to increase them to “maintain the same deterrent effect” (see [36]). The maximum penalty for a breach had been increased to $600,000 in 2014.

The High Court increased the penalty imposed on NZMEAL from $87,750 to $195,000 after taking into account the substantial means of the offender. Other factors of note were:

• it was the first product safety case considered at appellate level;
• it was the first prosecution where someone had actually been harmed (serious harm was caused to an 11 year old child who ingested the magnetic balls); and
• the High Court’s agreement with the Commerce Commission that since the maximum penalty was increased, District Court sentencing levels had been too conservative and higher sentence levels were required to recognise inflation, to reinforce deterrence and for accountability.

Westlaw commentary has been updated for:

Section 6  Functions of Commission in relation to dissemination of information (see [FT6.03(6)])

Section 31  Unsafe goods (see [FT31.02])

Section 40  Contraventions of provisions of Parts 1 to 4A an offence (see [FT40.04(38)] and [FT40.07])

For further information about the updated commentary, see Fair Trading — What’s New.

Commentary in Gault on Commercial Law will also be updated shortly. Details will be posted on the Gault on Commercial Law — What’s New page as they become available.