The trusted voice of the auto industry for more than 25 years Issue 10-2013 8 June 2013 In this issue Law reforms will p9 Fall-out from Ford Australia p10 Dealers roll up for awards triple sentences p12 IMVIA predicts strong year p14 V8 SuperTourers’ buy-out he Commerce Commission Act (FTA) – and after Sentencing knowledge of what can happen.” will continue to take shill Act precedents and discounts Under the Consumer Law p20 Chinese cars ‘unstoppable’ bidding seriously, would were considered. Reform (CLR) Bill, the maximum Tlike to see car dealers set realistic Wallace describes the penalty for serious offences p26 In-depth industry statistics online reserves and expects $42,000 shill-bidding fine as in committed by companies under bigger fines to be handed down the “appropriate range” when the FTA will be tripled to $600,000. by the courts when new compared to other FTA cases. Wallace believes this new legislation is in place. “The $200,000 for each offence is maximum will result in courts Those are the views of Stuart the maximum the court can impose,” increasing penalties in cases Wallace, the commission’s he told Autofile. “This case needs brought by the commission. competition manager, after The to be compared to widespread “Other aspects are involved, Auto Co was fined $42,000 and campaigns on television, such as not only the fines,” he points out. ordered to pay court costs of $1,727. Vodafone last year. “There’s the bad publicity that 100% The sentence followed a guilty “The Auto Co is in a different comes with these cases, Trade New Zealand plea to misleading consumers context and the whole thing has to Me has cancelled The Auto Co’s Owned about the prices of vehicles sold be taken into account. This is a pretty memberships, and there are Freephone: 0800 435 7868 [email protected] • www.protecta.co.nz on Trade Me under the Fair Trading significant fine for what it did in the [continued on page 4] Court records expose scam p16 he full extent of The Auto Its vehicles listed for auction The Auto Co,” states the case’s Co (Millennium) Ltd’s illegal during the charge period had $1 summary of facts. activities on Trade Me reserves and numerous Trade Me “This higher price became Tbetween June 2011 and July 2012 accounts were used to place shill the new reserve, replacing the are detailed in court papers bids on them. $1 reserve without alerting other requested by Autofile. Some were the personal accounts auction participants. The company used classified of The Auto Co’s employees, others “The intended and actual Track day fun advertising and online auctions to belonged to associates. effect was to manipulate the sell used Japanese imports from its “In each case, the shill bidder price to ensure the higher and with Trade Me car yard in Penrose, Auckland. continued to a price dictated by [continued on page 6] INTERNATIONAL VEHICLE LOGISTICS SOLUTIONS Web: www.autohub.co.nz Contact: [email protected] jacanna load it ad_art.pdf 1 5/06/12 3:54 PM C M Y CM MY CY CMY K jacanna load it ad_art.pdf 1 5/06/12 3:54 PM editor’s note Rotten apples need big fines he sentencing of The Auto Bizarrely, some media The courts are limited by when the market is distorted Co in Auckland District incorrectly reported The Auto Co precedents and look at the bigger by auctions being illegally Council should have been was fined $75,000, which was then picture, but the government manipulated through artificially Tan “in and out” affair. reduced to $42,000. wants tougher sentences, so the inflated prices. The hearing lasted about an hour What actually happened was maximum fine for each serious Law-abiding car dealers have all up, but it didn’t seem like that for somewhat different. The defence offence under the FTA committed suffered – more than 500 shill- the media scrum that arrived for the and prosecution argued for by businesses will be tripled under bid auctions means more than 10am listing on May 23 and left as different starting points before the the Consumer Law Reform Bill. 500 vehicles that could have darkness was descending. judge opted for $75,000. The Auto Co’s offending left been sold by honest traders in The case was pushed back This is the starting point from plenty of victims in its wake. In Auckland. an hour before the court room which factors, such as entering a addition to buyers who were The automotive sector is also a became packed with print, online guilty plea and reparations, are conned by shill bids at the end victim because its reputation has and radio journalists, television given as discounts before the of phoney auctions, Trade Me been dragged through the mud crews, and Commerce Commission actual fine is established. ploughed a huge amount of – and we’re all taxpayers who end and Trade Me staff. The defence called for a $25,000 resources into investigating the up paying for prosecutions. A walk around the complex fine but the judge settled on case and has suffered damage to Tougher financial deterrents are during one of many adjournments $42,000, which was more in line its reputation. needed, while it’s on everyone’s revealed empty courts – perhaps with what the Crown wanted. There were also buyers whose shoulders to report suspected C a civil servant should have Many people in court thought losses cannot be quantified cases of shill bidding. noticed the Herald’s front page it was a small fine compared to the because bogus bids were made M story that morning. scale of offending – after all, the early in the auction process. Darren Risby Y Masashi Umeoka, director charge period spanned 13 months. The whole industry suffers Editor CM of The Auto Co, was a no-show The maximum $200,000 MY because he was in Japan trying fine for each serious offence to rebuild his business where, under the Fair Trading Act (FTA) CY the court was told, shill bidding takes in the wider context and CMY ACCESSORY is rife. precedents. K Although Umeoka was aware The Morrison Car Company of shill bidding going on at his case was taken into account as BUNDLING Auckland business, his lawyer were Kathmandu and Bond & CREATE AN EXCLUSIVE MODEL said he didn’t think it was illegal Bond, which were fined $25,000 FOR YOUR BRAND here and didn’t realise the scale and $65,000 respectively after WINDOW TINTING SUNROOF of the crimes. customers were misled over the BLUETOOTH LEATHER SEATS After presenting written prices of sale items. COMMAND CENTRE WITH BADGING GPS REVERSING CAMERA submissions – obtained by Autofile Then there are Vodafone’s fines SPORTS SEAT UPGRADES and reported on in this issue – in 2011 and 2012, which came to the horse trading started on the about $1.5 million, for 21 charges on STRIPES starting point for fine. misleading marketing campaigns. EDITOR Darren Risby [email protected] BLIND SPOT ELIMINATOR 021 137 5430 RUNNING BOARDS ADVERTISING Brian McCutcheon DESIGNER WHEELS PARKING SENSORS [email protected] Adrian Payne VIEW 021 455 775 [email protected] VIDEO WWW.DEALERSHIPEDITIONS.CO.NZ Autofile is also available as an electronic copy via email. If you’d like to receive electronic PACKAGES FOR ALL VEHICLES copies please send an email with your name and organisation to: [email protected]. Back copies are also available on request. Copyright: Published twice monthly by 4Media, PO Box 6222, Dunedin 9059 All statements made, although based on information believed to be accurate and reliable, Driving Solutions cannot be guaranteed, and no liability can be accepted for any errors or omissions. Reproduction of autofile in whole or part, without written permission, whether by xerography Retro Vehicle Enhancement | www.rve.co.nz | 0800 RETRO 4U or any other means, is strictly forbidden. All rights reserved. www.autofile.co.nz | 3 news [continued from page 1] Commission wants ‘sensible’ reserves legal costs and compensation. being brought to its attention. These are factors in the mind of “They are the ones with access the courts, which are bound by to bidding records and that’s a decisions in other cases.” good place to start with these A lot of money can be spent things,” says Wallace. by companies on positive “Trade Me’s analysis and marketing, which is left in tatters material was essential for us to by cases such as this one. take this forward. It sees this as Wallace says the commission important to the integrity of its will continue to take shill bidding business and the commission will seriously and with firm enforcement always uphold the law.” action, “all things being equal”. Jon Duffy, head of trust and “There’s no reason why realistic safety at Trade Me, feels a higher The Auto Co sold a 2002 Mazda MPV, similar to this one, for $6,850. Shill reserves cannot be set,” says Wallace. fine was probably warranted but bidding conned the buyer out of $350. “Why pretend to sell for a $1 reserve it doubled the previous highest or something else ridiculous? one for ghost bidding. Duffy believes some FTA fines Duffy says: “It carries a lot of “Dealers should put sensible “If the fine was tripled “can be notoriously low – for risk as a way to market vehicles, reserves on cars and trade on that. post-consumer law reforms to instance, Ribena was fined $75,000 so dealers need to think long and Consumers deserve to know they’re $120,000, this would have been for not having vitamin C in its hard if they can afford to stand by bidding against other buyers, not more in line with The Auto Co’s ill- drinks” – but he hopes tripling the that if a car sells for $1.50.