PHOTO: Mitre 10 MEGA
Following a Commerce Commission investigation, the sister company of a Mitre 10 MEGA operator has been fined $500,000, according to an announcement made by Commerce Commission chair, John Small, at the High Court in Wellington. The fine serves as a warning to others considering similar actions.
NGB Properties, accused of placing an anti-competitive covenant on a site near Mitre 10 MEGA Tauranga, allegedly to prevent competitor Bunnings from establishing a nearby store, was at the center of the Commission’s scrutiny. It was revealed that NGB Properties was affiliated with Juted Holdings Limited, the operator of Mitre 10 MEGA in Tauranga. The Commerce Act prohibits the use of land covenants that are designed to significantly reduce competition in a market or are likely to have that effect.
Chairman Small explained that such land covenants can negatively impact competition by creating obstacles for new entrants or expansions in a specific market, making it difficult for competitors to effectively compete and grow. In this specific case, the covenant aimed to block Bunnings, a competitor of Mitre 10, from establishing a nearby store, thus depriving residents of Tauranga from benefiting from a more competitive local market for DIY and building supplies.
The Commission also highlighted that land covenants pose a problem in other industries, such as fuel, groceries, and residential building supplies sectors, where they could potentially hinder healthy competition.