ComCom Targets Bundling Loophole

The Commerce Commission is challenging Contact and Nova, two leading providers of bundled energy and broadband services, 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,” said 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. 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,” says Mr Gilbertson.

However, the Commission is concerned that Contact and Nova persist with GST-exclusive pricing by default, when 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. It’s inherently confusing to combine GST-inclusive broadband and GST-exclusive energy pricing in the same bundle.”

Mr Gilbertson said the Commission is pleased the 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.”

In the 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.

The Commission will continue to monitor the market for compliance with all other aspects of the guidelines and encourages consumers to use TDR – the industry’s independent and free dispute resolution scheme – if they run into any issues.

Background

The Energy/Broadband Bundling Guidelines were issued in November 2023.

The guidelines were designed to increase transparency and reduce consumer confusion in relation to the marketing of energy and broadband bundles.

Bundling has been one of the fastest growing segments of the broadband market over the past two years – attracting a total of nearly 300,000 consumers.

There are currently six main providers of bundled energy and broadband services: Mercury, Contact, Nova Energy, Electric Kiwi, Pulse Energy and 2degrees.

The Commission’s recent review of compliance with the guidelines found that providers have amended their conduct and are complying with all key requirements except for Contact, Nova and Pulse in relation to the GST-inclusive pricing requirement.

Pulse has committed to correcting its conduct but Contact and Nova have not yet done so.

The guidelines require that:

• If electricity or gas is cheaper outside a bundle with the same provider, this should be disclosed prominently upfront to consumers.
• If goods (such as fridges, TVs, or vacuum cleaners) are included in a bundle, then the recommended retail price should be disclosed upfront, to help consumers determine the value of the bundle.
• If consumers are unable to switch one part of the bundle without losing another (such as being unable to switch their electricity provider without losing their broadband), this should be disclosed prominently upfront to consumers.
• Consumers should be told clearly what they will need to repay if they cancel any bundled service while in contract.
• All prices in the bundle should be disclosed inclusive of GST to end the practice of having energy prices shown exclusive of GST and broadband prices inclusive of GST.

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