Commission says ad bans anti-competitive

Press, 14 October 1986, Page 32

Commission says ad bans anti-competitive

PA Wellington Advertising bans on members of trade associations are likely to infringe the Commerce Act, because they are anti-com-petitive, the chairman of the Commerce Commission says.

The professions in particular were inclined to make rules restricting their members advertising, Mr John Collinge said in a speech to the Council of the Institution of Professional Engineers of New Zealand. By their very nature such rules were likely to be anticompetitive, he said. Advertising was not

necessarily incompatible with professional status and advertising restrictions could stop the public from easily finding out about the range of services available. Studies in America comparing states which allowed advertising and those which did not had shown no support for the view that the quality of services was adversely affected by advertising, Mr Collinge said. However, not all advertising restrictions would be anti-competitive or of no benefit to the public. Rules about comparative advertising, that is,

claims of superiority which were difficult to prove, were not out of place for the professions. Mr Collinge said he also favoured rules which prevented inaccurate or misleading advertising, although thay were likely to be penalised under the Fair Trading Bill, expected to come into force in 1987.

Advertising restrictions designed to stop the . profession being given a bad image would be acceptable under the Commerce Act if they were administered properly. Mr Collinge said there were grey areas, in par-

ticular the danger in associations monitoring the advertising of its members purely on the grounds of taste. The public were likely to be able to judge matters of taste for themselves, and judgements by an association could be an indirect way of preventing what it considered to be over-vigorous competition. Mr Collinge said that there had been a number of inquiries made to the Commission about the right to restrict competition by limiting advertising and any complaints in this respect would be investigated closely.