ComCom targets bundling loophole

The Commerce Commission is challenging bundled energy and broadband service providers Contact and Nova to stop GST-exclusive pricing by default – a practice that shaves 15% off the headline price displayed to consumers.

“This is something we don’t see anywhere else in the retail space and creates the illusion of savings that don’t exist,” says telecommunications commissioner Tristan Gilbertson.

The commission’s challenge follows a review of guidelines issued in November last year to address concerns about the way providers were marketing bundled services – which often lacked clarity and obscured costs.

“We’re pleased that providers have cleaned-up their marketing,” says Gilbertson.

“They’ve stopped the practice of luring consumers into bundles with sharp upfront broadband discounts, while increasing power prices at the back end, which usually offset any savings,”

However, the commission is concerned that Contact and Nova persist with GST-exclusive pricing by default, when it says a fully-loaded retail price is what most Kiwis are accustomed to seeing. 

“With escalating electricity costs, and wider cost-of-living concerns, it’s unhelpful for energy providers to make their prices look cheaper than they really are,” says Gilbertson.

“It’s inherently confusing to combine GST-inclusive broadband and GST-exclusive energy pricing in the same bundle.”

Gilbertson says the commission is pleased other main providers – Mercury, Electric Kiwi, Pulse Energy and 2degrees – have amended their conduct and are complying with all key requirements.

“We’ll give Contact and Nova an opportunity to do the right thing before we look at other action to prevent confusion for consumers.”

Meanwhile, the commission encourages consumers to take care to ensure they’re comparing the right numbers when looking at bundles from Contact and Nova, given the difference 15% can make on the total price.

ComCom says it will continue to monitor the market for compliance with all other aspects of the guidelines and it encourages consumers to use Telecommunications Dispute Resolution (TDR) – the industry’s independent and free dispute resolution scheme – if they run into any issues.