Magazine article New Zealand Management

Inbox: Tough Cartel Penalties Ahead

Magazine article New Zealand Management

Inbox: Tough Cartel Penalties Ahead

Article excerpt

Businesses would be well advised to review their arrangements with third parties in the same industry following the recent introduction of new legislation criminalising price fixing between competitors.

The Commerce (Cartels and Other Matters) Amendment Bill recently passed its first reading and will go before the Commerce Select Committee later this year for consideration.

The Bill replaces the current 'price fixing' provisions in the Commerce Act with new sections that deal expressly with cartels. While the term is often used to indicate serious illegal conduct, such as drugs or arms dealing, the Bill's definition of "cartel" is wide-reaching and will capture collusive conduct across any industry.

Under the legislation, it will be an offence to enter into a contract, arrangement or understanding that may lead to price fixing, restricting the supply output, geographic market allocation between competitors or bid rigging during a tendering process.

Fines will continue to be one of the penalties for breaching trade practice provisions, which could also attract up to seven years in jail -- a significant deterrent.

The effect of the changes will be significant. This is the largest amendment to the Commerce Act since its introduction in 1986. The debate continues as to whether there is actually an issue with organised cartels in New Zealand that needs addressing through law reform, as very little cartel activity is detected by the Commerce Commission. …

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