Campaign on cartel conduct

Businesses are being reminded that agreements they reach with their competitors can result in jail time.

The Scene of a Crime campaign, the latest to be launched by the Commerce Commission, shows examples of situations in which competitors agree to fix prices, divide markets and rig bids – all of which are illegal.

The financial penalties for cartel conduct are significant ‒ individuals can be fined up to $500,000 and companies can be fined up to $10 million, three times the commercial gain or 10 per cent of turnover per year per breach. 

Since April 2021, businesses and individuals can also be liable for criminal conviction and individuals convicted of engaging in cartel conduct could face imprisonment.

“Cartel conduct harms consumers through higher prices or reduced quality and harms other businesses trying to compete fairly,” said Commerce Commission chair Anna Rawlings, pictured. “The possibility of imprisonment for cartel conduct underlines how serious and harmful this offending is.”

Law changes introduced last year mean individuals involved in cartels can now be liable for a term of imprisonment of up to seven years, making it more important than ever that companies stay on the right side of the law.

The regulator is running an online, social media and radio campaign to help educate directors, business owners, managers and employees about cartels, and how to report cartel conduct.

“Businesses and their staff need to be able to recognise and avoid the kinds of conduct that amount to cartel conduct,” says Rawlings. “This campaign is part of a range of educational initiatives by the commission to help increase businesses’ understanding of cartel conduct and its consequences.”

Businesses or individuals wishing to report cartel conduct can contact the regulator, which can grant leniency to the first member of a cartel to approach it if they meet the requirements for leniency. There is also an anonymous whistleblower tool.

A cartel is where 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.

Cartels are banned under section 30 of the Commerce Act. Changes introduced in April last year mean such conduct is punishable with a term of imprisonment of up to seven years. Conduct which occurred before April 8, 2021, is not subject to the new penalties.

In September 2021, penalties were imposed for taxi cartel conduct after the commission filed proceedings against Hutt & City. Penalties were also imposed in a container depot price-fixing case last year.

Visit the commission’s website for more information.