Action against freight forwarders
The Commerce Commission has filed civil proceedings in the high court against two international freight-forwarding companies.
It has taken the action against Mondiale Freight Services and Oceanbridge Shipping, as well as four individuals associated with them, after alleging the two companies entered into and gave effect to cartel agreements.
The regulator claims the defendants agreed with competing freight forwarders not to compete for their customers.
These were separate cartels, and the commission doesn’t allege Oceanbridge and Mondiale entered into any agreements with each other. The competing freight forwarders also purchased services from the defendants.
The regulator has agreed settlements to resolve the separate proceedings with each of the defendants, and a penalty hearing will soon be scheduled.
As this case is now before the courts, the commission will be making no further comment.
Background to matter
International freight forwarding refers to all aspects of the logistical arrangements for the movement of cargo in and out of the country, by air or sea.
Generally, international freight forwarders do not physically carry the cargo between countries, However, they arrange for it to be moved by a third party, such as an airline or shipping line, as well as offering a range of other related services, like customs clearance.
The commission says the alleged arrangements in this case relate to agreements reached prior to the Covid-19 pandemic, and took place before and after the Commerce Act was amended in 2017. All alleged conduct ceased before April 8, 2021.
A cartel is when two or more businesses agree not to compete with each other including by price-fixing, allocating markets or customers, rigging bids or restricting the output or acquisition of goods and services.
Cartel conduct is prohibited under section 30 of the Commerce Act. Before section 30 of the act was amended in 2017, it prohibited price-fixing.
The commission alleges the conduct in this case breached the former price-fixing prohibition and ban of cartel conduct.
As of April this year, cartel conduct is now punishable with a term of imprisonment of up to seven years, which underlines how serious and harmful offending of this nature can be. Conduct that occurred before April 8 isn’t subject to the new penalties.
