KEY POINTS:
A company director who ordered his staff to cut "Made in China" labels off 2006 Commonwealth Games uniforms and replace them with "Made in New Zealand" labels says he did not set out to mislead anyone.
Auckland-based company Sports Resources was yesterday fined $23,750 in Auckland District Court
for two charges of breaching the Fair Trading Act.
The company pleaded guilty in February to making the uniforms in China, then replacing the original labels with "Made in New Zealand" ones.
Anthony Grant Botica, one of the company's three co-directors, was convicted and discharged on similar charges. Judge Elizabeth Aitken said it was important that consumer confidence on branding and labelling, in particular on New Zealand-made goods, was upheld.
Sports Resources, which regularly makes rugby jersey replicas for adidas, had contracted through adidas to make the Commonwealth Games uniforms for the New Zealand Olympic Committee (NZOC).
Judge Aitken said the decision to change the labels came after a misinterpretation of the contract between the company, the NZOC and adidas.
Botica gave adidas an e-mail quote of $250,000 for the uniforms, screen-printing and embroidery costs.
He had intended to mean the screen printing and embroidery costs would be on top of the $250,000 but adidas and the NZOC assumed it was the total cost.
In the following months Botica realised the estimate had been misinterpreted and the company was left to shoulder the extra costs.
"Faced with escalating costs Mr Botica decided to have the goods made in China to reduce costs," Judge Aitken said. She was satisfied that while Mr Botica's actions were deliberate, he did not set out to mislead from the outset.
When the company was advised by the Commerce Commission of the investigation it did not seek to conceal what it had been doing.
Eight of the 12 Commonwealth Games garments had been affected, ranging from polar fleeces to singlets.
The judge said Botica's actions had been in part caused by the ever-changing and increasing requirements of the NZOC.
He had gone into the contract intending to make the goods in New Zealand but increased costs meant he looked to China.
E-mails between Botica and the NZOC and adidas showed a man becoming increasingly frustrated with the demands put on him and he clearly wanted to do the right thing by his client and his company, Judge Aitken said.
Outside the court an emotional Botica told the media it had been a stressful 18 months and he was remorseful for the incident. He had not planned to switch labels and was not out to make a "quick buck", he said.
Commerce Commission manager Graham Gill said outside the court that he was pleased with the outcome.
Botica had made a dishonest and deliberate decision, not entirely of his making, Mr Gill said.
But many other businessmen found themselves in similar situations and had not resorted to such measures.
The ruling sent an important message to businesses to ensure they understood and accepted all the terms of a contract.
Behind the switch
* Company director Anthony Grant Botica ordered staff to put Made in New Zealand labels on Chinese-made 2006 Commonwealth Games uniforms.
* Judge Elizabeth Aitken said yesterday that she accepted Botica made the switch because he faced escalating costs after confusion over the job price.
* The Commerce Commission says many businessmen find themselves in similar situations but do not resort to misleading customers.
- NZPA