Commerce Commission Rules on Unfair Terms

06 May 2015


The recent Commerce Commission ‘ruling’ on Unfair Contract Terms for utilities is great news for businesses.

Total Utilities has been negotiating utility agreements since 1999 and a recurring bugbear for us in the past 16 years has been the use of automatic contract roll-over and right of renewal/price-matching provisions by some suppliers to constrain effective competition.

Put bluntly, these clauses have been used as a ‘hospital pass’ by the suppliers in question to avoid a level competitor playing field – especially in the waste services/recyclables and natural gas markets.

As of 16 March 2015, the applicable new agreements must not include such clauses (i.e. Unfair Contract Terms).

It must be emphasised however that these contract clauses are still allowed if existing supply/service agreements are renewed for a further term.

The implications of this are very clear, businesses should negotiate brand new agreements covering the utilities etc in question – don’t just roll your existing agreement on the basis of unchanged contract terms and conditions.

Reference should be made to the Commerce Commission website for full details of their ruling. A PDF of the ruling can be downloaded here.