Labour promises to make 'excessive' prices illegal, and to set a 'clear legal test'

Labour is pledging to make it illegal for large companies to charge “excessive prices” for essential goods and services, or to pay “unfairly low” prices to suppliers.

Leader Chris Hipkins promised to set a “clear legal test… [for] prices well above what they would otherwise be in a competitive market, sustained over time,” in an election policy announcement. The party says the policy could apply to the likes of food, power, fuel, transport, telecommunications banking, and insurance.

Labour wants to give the Commerce Commission powers to investigate price gouging, and penalise companies that gouge and force them to “hand back every dollar of excess profit.”

"Right now, a company big enough to dodge competition can charge excessive prices for the basics, like food and fuel, and there's no law against it,” Hipkins said. “Labour will change that, by making it illegal for big powerful companies to rip off New Zealanders on the essentials.”

Consumer affairs spokesperson Arena Williams said the growers “who put food on our shelves get squeezed by the big players just as hard as the families buying it.”

“This is aimed at a small number of very large companies, it won't touch the 97 percent of New Zealand businesses that are small, like your local dairy or cafe.

“It also only applies in markets for essentials, like food, power, fuel, transport, telecommunications banking, and insurance.”

The policy is similar to the recent Green Party promise to follow Australia’s recent move to ban “excessive pricing”. They want to restrict supermarkets to charging prices that are not in excess relative to the cost of supplying the products, plus a fair margin.

Supermarkets would be required to record prices so to be able to provide to the Commerce Commission when requested, with breaches carrying a proposed penalty of up to $10 million, three times the value of the commercial gain, or 10% of turnover.