Overview of the bill
The bill, which follows similar legal developments in the US, European Union and Australia, proposes several amendments to the Consumer Guarantees Act 1993 (CGA). The explanatory note to the bill (which is a Members Bill introduced by Hon Marama Davidson) explains that the reforms are intended to support the development of a “circular resource economy” by reducing waste where goods can be repaired. If enacted, the bill would represent a substantial change to New Zealand’s consumer protection framework and would introduce material new obligations for suppliers and manufacturers of consumer products.
To summarise the key changes in the bill:
- Manufacturers would be required to provide spare parts and certain information to consumers, promoting product longevity, reducing consumer costs and supporting a circular economy.
- Consumers could require suppliers to repair defective goods within a reasonable time, rather than replacing those goods.
- The bill repeals the current exemption on providing repair facilities and parts where a consumer is notified at the time the goods are supplied that repair facilities and parts are not available for the relevant goods.
Implications
The proposed changes in the bill will have significant implications for both suppliers (e.g. retailers) and manufacturers. The definition of “manufacturer” extends beyond entities that assemble, produce or process goods and may also include: (i) retailers that white-label or sell own-branded products; and (ii) importers and distributors of goods manufactured outside New Zealand, where the foreign manufacturer does not have an ordinary place of business in New Zealand.
- Guarantee as to repair and spare parts: new obligation on manufacturers
The CGA requires manufacturers to ensure that repair facilities and spare parts are available for a reasonable period after the goods are supplied. The bill proposes to retain this guarantee and introduces an additional requirement on manufacturers to, upon request, provide consumers with information, spare parts, software and other tools used by the manufacturer for diagnosing, maintaining or repairing goods.
In many cases, this additional obligation will necessitate manufacturers to adopt new processes to achieve compliance. For example, manufacturers will need to ensure sufficient spare parts for all goods it sells are available within a reasonable time – this may involve increased production costs or re-negotiating supply contracts to secure sufficient inventory. Additionally, manufacturers should carefully consider how they would comply with the obligation to provide consumers with information and/or software used to diagnose, maintain or repair goods – especially when these may include sensitive information, proprietary content or intellectual property that may be restricted from widespread distribution. We expect that clarifying the scope of this obligation will be a key priority for many manufacturers and suppliers of consumer goods, particularly where the information may be complex or sensitive (such as consumer electronics and sophisticated technology).
- Consumers enabled to request repair over replacement
When a supplier is required to remedy a failure of any goods to comply with a guarantee, the CGA allows the supplier to repair, replace or refund the goods. The bill will build on this framework by providing consumers with a right to request that a supplier repairs goods, and in such instances, suppliers would be required to repair goods within a reasonable time. If the supplier is unable to repair the goods within a reasonable time, the consumer may have the goods repaired elsewhere and obtain from the supplier all reasonable costs incurred in the repairs.
In our experience, many suppliers elect to replace defective goods in the first instance. This approach is often driven by cost considerations, as repair expenses can exceed replacement costs, particularly for lower-priced items. Additionally, suppliers often include contractual protections in their procurement agreements, allowing them to seek reimbursement from their own suppliers for defective products. In such cases, replacing goods for consumers and subsequently recovering costs from upstream suppliers is a more cost-effective and time-efficient solution.
Suppliers adopting this model will be particularly impacted by this change in the bill, as consumers may require a repair, even where replacement is preferred by the supplier. Consumers may additionally be entitled to arrange third party repairs and seek reasonable costs from the supplier. To mitigate these impacts, suppliers may need to ensure cost-effective repair options are put in place. This may be achieved, for example, by negotiating repair arrangements with upstream suppliers or engaging third parties to perform repairs on their behalf.
- Repeal of exemption to guarantee as to repair and spare parts
The CGA currently provides an exemption to the guarantee as to repairs and spare parts, under which manufacturers are not required to provide repair facilities and parts where a consumer is notified at the time the relevant good was supplied that repair facilities and parts are not available for the relevant goods.
The bill would repeal this exemption, and therefore manufacturers will be required to take reasonable action to ensure that facilities for repair of goods and supply of parts for the goods are reasonably available after goods are supplied. Manufacturers may, therefore, need to update inventory forecasting, renegotiate supplier contracts, and account for potentially increased warehousing and logistics needs.
Next steps
New Zealand businesses involved in the supply or manufacturing of consumer goods should proactively assess the potential implications of these regulatory changes. As noted above, the changes may require:
- Adopting new processes to ensure the availability of spare parts and repair services.
- Consideration of whether the new obligation to supply consumers with information and software causes any issues from a sensitive information, proprietary content or intellectual property perspective.
- Renegotiating supply agreements to secure sufficient spare parts inventories and cost-effective repair options from upstream suppliers.
- Engaging with third parties to provide product repair services.
- Accounting for increased operational costs and warehousing/logistics needs.
Submissions open
It will also be important for consumer-facing suppliers and manufacturers to engage in the bill’s submission process to influence the design of consumer law in New Zealand. As noted above, submissions are due by 3 April 2025.
Bell Gully’s Consumer, Regulatory and Compliance (CRC) Team has been closely monitoring the development of The Consumer Guarantees Act (Right to Repair) Amendment Bill. If you would like further details on the bill, or assistance in preparing a submission, please get in touch with the authors or your usual Bell Gully adviser.