Court raises NZME fine

A business that admitted supplying unsafe magnetic toys has had its fine more than doubled by the High Court.

Earlier this year, NZME Advisory Ltd (NZME) was fined $87,750 for supplying the magnetic puzzle toys, commonly known as buckyballs, via the GrabOne website. NZME has since sold the site.

The Commerce Commission argued that the original fine was “manifestly inadequate” and did not appropriately reflect the presence of harm. The High Court agreed, increasing the penalty to $195,000.

Commissioner Anne Callinan said the fine set an important benchmark for similar cases, where a large company did not have adequate compliance processes in place, and supplied a prohibited product that caused serious harm.

Buckyballs are made up of small, high-powered magnetic balls. NZME sold 213 of the toys between October 2020 and September 2021, in breach of an unsafe goods notice which bans the supply of any magnets, sold in sets of two or more, that are a particular size and strength.

If more than one of the magnets were swallowed, they could attract to each other within the body. One child who swallowed two magnets from buckyballs supplied by NZME required emergency surgery.

After being contacted by the commission, NZME recalled the sets.

In an appeal judgment out this week, Justice Peter Andrew said it was “difficult to conceive of a more serious case in terms of the impact of offending on a victim”.

The starting point for the fine imposed by the High Court was $300,000. After discounts for compliance, remorse and reparation (10%), and 25% for the guilty plea, the end penalty for NZME was $195,000.