- The Bill introduces criminal offences for cartel conduct, with fines up to the greater of $10 million, three times the commercial gain resulting from the offence, or 10% of the company’s turnover for companies, and fines up to $500,000 and/or up to 7 years’ imprisonment for individuals.
- It also provides a defence if, at the time of the alleged cartel conduct, the defendant believed on reasonable grounds that 1 or more of the exceptions to the cartel prohibition set out in the Commerce Act applied to the relevant conduct.
- However, this defence does not apply if the defendant’s belief was based on ignorance or mistake of law.
- A “cartel prosecutors panel” will be appointed by the Solicitor-General to conduct prosecutions under the new criminal offence on behalf of the Crown.
So what does this mean for New Zealand businesses?
The prohibition against cartel conduct is very broad – most arrangements between actual and potential competitors risk being caught by the broad definitions of “price fixing”, “output restriction” and “market allocation.”
At the outset of any collaboration between actual or potential competitors, the parties should consider whether there are any potential cartel implications to the collaboration, and if so, whether 1 or more of the relevant exceptions for “collaborative activities”, “vertical supply contracts” or “joint buying & promotion” applies.
If you would like to discuss how the Bill may impact your business and/or arrangements, please get in touch with a member of the Matthews Law team – contact details are here.
The history of cartel criminalisation in New Zealand
Cartel criminalisation was first proposed in New Zealand in 2011 under the Commerce (Cartels and Other Matters) Amendment Bill but was subsequently dropped in 2015 by the then National government, citing “chilling effects” on pro-competitive behaviour.
Cartel criminalisation was re-introduced under the Bill in early 2018. At the time Commerce and Consumer Affairs Minister Kris Faafoi said the government “wants to take a strong stance against business people who collude against the interests of consumers.”
5 April 2019