Commerce Commission files first criminal charges for cartel conduct

12 December 2023

For the first time in New Zealand since cartel conduct was criminalised in 2021, the Commerce Commission has filed criminal charges against individuals and companies for alleged cartel conduct. While the matter is currently before the courts and it may be some time before a judgment is handed down, it does serve as a timely reminder that cartel conduct is unlawful and will not be tolerated by the Commission.  

Cartel conduct involves two or more competitors agreeing to fix prices, allocate markets or customers, or restrict their output of goods or services. Cartel conduct is now punishable with a potential jail term for offending individuals of up to seven years.

The Commission’s announcement on 12 December relates to criminal charges filed against two construction companies and two directors for alleged bid rigging of publicly funded construction contracts. Bid rigging is a form of cartel conduct where some or all of the bidders or potential bidders agree on certain competitive aspects of a bid, such as prices or who will participate in a tender.

The names of the defendants have not yet been released, which is standard practice in the early stages of criminal matters as it allows the opportunity for defendants to seek name suppression.

The Commission’s first criminal proceedings have come in relatively short order following the introduction of cartel criminalisation in April 2021. Criminal sanctions can only apply to cartel arrangements entered into or given effect to after April 2021 and gathering sufficient evidence on which to base a case can take considerable time (bearing in mind the often covert nature of cartel conduct).  This three-year period is faster than the Commission’s international peers who have had to grapple with new criminal cartel laws.

The prosecution sends a strong message that the Commerce Commission will not tolerate cartel conduct, and is prepared to lay criminal charges to enforce the law. Chair of the New Zealand Commerce Commission, Dr John Small, stated:

“Bid rigging of publicly funded construction contracts loads extra costs onto taxpayers and the New Zealand economy as conduct of this type undermines fair competition. The Commission will not hesitate to bring criminal proceedings in appropriate cases to ensure kiwis are getting the benefits of fair prices, quality services and more choice.”

Indeed, the Commerce Commission has shown a renewed vigour to take court proceedings against potential Commerce Act breaches. These proceedings come hot on the heels of the Commission’s announcement last week that it is taking proceedings against two companies, Alderson Logistics Limited and related company Supa Shavings (2022) for completing an allegedly anticompetitive merger that was not notified to the Commerce Commission.

If you have any questions about the matters raised in this article please get in touch with the contacts listed or your usual Bell Gully adviser.

Disclaimer: This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.