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Brilliance fined $540,000 for misleading representations

Press Release – Commerce Commission

Brilliance International Limited has been fined $540,000 for making false and misleading representations relating to its steel mesh products which are used to earthquake strengthen buildings.Brilliance fined $540,000 for misleading representations about steel mesh

Brilliance International Limited has been fined $540,000 for making false and misleading representations relating to its steel mesh products which are used to earthquake strengthen buildings.

Auckland District Court Judge Robert Ronayne sentenced Brilliance on 20 charges brought by the Commission under the Fair Trading Act. Brilliance pleaded guilty to making false and misleading representations for its 147E steel mesh product which it marketed and sold as being earthquake grade ‘500E’ steel mesh between 30 September 2012 and June 2016.

The offending involved eleven charges of making representations that were liable to mislead the public on their website and on product tags that its 147E steel mesh complied with the Australian/New Zealand Standard for reinforcing steel suitable for structural use in an earthquake zone when it did not. The other nine charges relate to false and misleading representations on its website that the product had been tested by independent testing laboratory SGS New Zealand, when it had not. The charges relate to approximately 35 batches of 147E steel mesh or 56,125 sheets.

“The safety and durability of New Zealand’s buildings depend on them being constructed with materials that comply with the relevant standards. False and misleading representations about building products are a priority for the Commission because compliance with standards is critical to both public confidence and safety,” Commission Chair Dr Mark Berry said.

In his judgment, Judge Ronayne said “It is self-evident that Standards are fundamentally important. The defendants conduct… plainly undermined the New Zealand Building Code and the objectives of Standards in general.”

“The defendant’s conduct is highly culpable because its behaviour has left consumers in a position of uncertainty because it cannot now be known whether all of the [steel mesh] complied. This position of uncertainty is what the FTA and the Standard seek to avoid,” Judge Ronayne said.

In February 2016, the Commission issued a Stop Now Letter requesting that Brilliance stop representing its 147E as 500E grade steel mesh complying with the Standard. Brilliance complied with that request. The Stop Now was lifted in May 2016 after Brilliance agreed to court enforceable undertakings requiring specific independent testing for each batch of steel.

A copy of the written judgment is available on our case register.

Background
Steel mesh cases
The Commission filed charges against a number of companies relating to false and misleading representations about 500E steel mesh. In 500E the ‘E’ stands for earthquake, and the Standard specifies strength and ductility (elasticity) requirements for steel reinforcing materials. The Standard also specifies the procedures (ie, sampling and testing) that must be followed to produce steel of the specified standard, including:
• manufacturing methods that must be used by steel manufacturers
• chemical, mechanical and dimensional requirements of mesh
• sampling and testing of each batch of mesh
• identification and labelling of different grades of mesh.

To be sold in New Zealand as 500E grade steel mesh, the mesh must be produced in accordance with the requirements of the Standard. If mesh is produced in any other way, it cannot be described as 500E mesh. The Ministry of Business, Innovation and Employment (MBIE) is the building regulator, and sets and enforces the Standards and Building Code. The Commission can investigate misleading or deceptive claims about compliance with the Standard.

The Commission has carried out a series of investigations into steel mesh following a complaint in August 2015. Following its investigations:
• Fletcher Steel Limited was issued with a warning
• United Steel Limited and Pacific Steel (NZ) Limited were issued with compliance advice
Timber King and NZ Steel Distributor were sentenced and fined $400,950 after pleading guilty to seven charges
Steel and Tube Holdings Limited pleaded guilty to 24 charges and the sentencing decision is currently reserved
59 charges against Euro Corporation are before the Courts.

If you can’t back it up, don’t say it
False and misleading representations about building products are a priority area for the Commission because of the serious harm they can cause consumers. Traders must be able to back up the claims they make and if they cannot, they should not be making them. Guidance for traders on unsubstantiated claims is available on our website.

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