Supplement scandal: Commerce Commission launches formal probe into embattled NZ Muscle

Today, the Commerce Commission confirmed it had now launched a full investigation under the Fair Trading Act 1986 Part 1.

“The commission has opened an investigation into conduct and representations made in relation to sports and nutritional products and supplements,” it said in a statement.

The Commerce Commission has shared more information about recent complaints made about supplement companies as it carries out its NZ Muscle probe. New Zealand Herald composite photo

Commerce Commission investigations can also take several months – and much longer if charges are laid in the High Court.

If the company is found guilty of breaching the Fair Trading Act, it could face six-figure fines.

Violations of the Fair Trading Act can lead to fines up to $600,000 for companies per offence, and up to $200,000 for company directors or individuals.

NZ Muscle was launched in the early 2000s by founder Dion Roosenbrand; who until the scandal broke was the company’s chief executive.

NZ Muscle’s reputation took a body blow when a video – titled “EXPOSING New Zealand’s Biggest Supplement Brand” – was released online on June 19.

Management of Auckland FC – whose ownership includes American billionaire Bill Foley, New Zealand’s richest businesswoman Anna Mowbray and her partner and ex-All Black Ali Williams – have “terminated” their partnership with NZ Muscle. New Zealand Herald composite photo

Broadcast on the Kino House Investigates channel on YouTube, the 40-minute video featured former workers and whistleblowers talking about some of NZ Muscle’s alleged practices.

The video included the explosive claims that NZ Muscle knowingly sold stock when it had passed its use-by date.

It also alleged the company had relabelled cheaper foreign products as its own New Zealand-made premium product. The video showed photos of empty stacks of tubs of a cheaper Mexican product in large bins at NZ Muscle’s Auckland headquarters.

An NZ Muscle spokesperson later confirmed whey protein and creatine products had been packed in “non-compliant” packaging, while two protein products had been “relabelled inappropriately”.

NZ Muscle began its life in an Auckland garage, before going onto being a trusted product by thousands of New Zealand gym-goers and other active Kiwis. Photo / Supplied

Within four days, NZ Muscle had apologised to customers and removed a raft of products from its shelves and popular online shop. It said an internal review had found several of its whey protein and creatine products had non-compliant packaging.

“NZ Muscle apologises for these issues and invites affected customers to request refunds directly,” the company said.

By then, both the Ministry for Primary Industries (MPI) and the Commerce Commission had confirmed they were investigating complaints against the company.

And seven days after the video was released, MPI ordered the recall of two products – NZ Muscle Creatine (unflavoured) and No Brand Creatine – fearing the “possible presence of an undeclared allergen (milk)”.

Roosenbrand stepped down as chief executive, being replaced by former professional boxer and community advocate Dave Letele.

David Letele (left) initially replaced Dion Roosenbrand as chief executive of NZ Muscle.

Roosenbrand said in a video when he stepped aside: “We made mistakes, we recalled product, and isolated any product with potential risk.

“I’m truly sorry to our customers, staff, partners and suppliers who have all been affected by this.”

But Letele’s tenure in the role lasted just a week before he left after receiving abuse and allegations of death threats.

New Zealand Food Safety – an internal business unit of the Ministry for Primary Industries – last week told the Herald the investigation relating to alleged breaches of the Food Act 2014 was now in the hands of Auckland Council.

NZ Muscle’s main headquarters are in Auckland.

Breaches of the Food Act can lead to fines of up to $300,000 for an individual and $1.5 million for body corporates or companies.

The Commerce Commission has launched a formal investigation into NZ Muscle, founded in the early 2000s by Dion Roosenbrand. New Zealand Herald composite photo

Auckland Council told the Herald it had concluded its part of the investigation and found “no evidence of critical risk” to food safety – a finding that is scheduled to be independently verified by independent auditor AsureQuality later this month.

The Herald also revealed last week more Kiwi supplement companies could be up for fines if detailed concerns about them are substantiated after the NZ Muscle scandal.

Allegations that other supplement companies have benefited from inaccurate expiry dates and country of origin labelling, as well as dodgy reviews, are about to be assessed by New Zealand consumer watchdog the Commerce Commission.

One of the allegations had already been looked at and dismissed.

Four others are to be assessed.

“One of the concerns took issue with reviews on a certain product allegedly failing to disclose the product had been gifted,” a Commerce Commission spokesperson told the Herald in a statement.

“Another concern related to an allegation that country of origin labelling was inaccurate.

“A third concern related to someone being charged for an order that never arrived, with attempted follow-ups unsuccessful.

Several NZ Muscle products have been recalled as the embattled company faces a duo of government agency probes. Photo / Supplied

“Another alleges the relabelling of products with a new expiry date.”

If full investigations are commissioned, they’ll be carried out by specialist commission investigators with input from internal lawyers. Such investigations can take up to a year.

If the allegations are proven, they will be considered breaches of the Fair Trading Act.

The fifth consumer complaint alleged inaccurate pricing and the commission opted to take no further action “due to an unclear breach of legislation within our remit, and the conduct appearing isolated or already remedied”.

Neil Reid is a Napier-based senior reporter who covers general news, features and sport. He joined the Herald in 2014 and has 34 years of newsroom experience.

Sign up to The Daily H, a free newsletter curated by our editors and delivered straight to your inbox every weekday.