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Cartel policy set to change

Government regulator calls for submissions as date for new criminal offence fast approaches.
Posted on 21 December, 2020
Cartel policy set to change

The Commerce Commission is consulting on its revised policy for cartel lenience and immunity, and revised template leniency agreement.

The policy has been updated to reflect changes resulting from the introduction of the new criminal cartel offence, which comes into effect in April 2021.

Anna Rawlings, pictured, who chairs the commission, says: “As well as bringing in the risk of jail time for cartel conduct, the new law means cartel participants may apply for immunity from criminal prosecution. 

“Only the Solicitor-General can grant this immunity, following a recommendation from the commission. 

“We want to provide clarity on our process before the law comes into effect and are especially interested in views from legal practitioners on our proposed revisions to the leniency policy.”

That policy outlines the process for the regulator recommending that an individual or firm should be granted criminal immunity by the Solicitor-General.

The latter has revised its draft guidelines on immunity from prosecution for cartel offences, which set out the criteria to be considered in deciding whether to grant immunity.

The commission will continue to consider applications for leniency in relation to civil proceedings. It can grant leniency to the first member of a cartel to approach it, provided that individual or firm meets the requirements. 

It will not take civil proceedings for cartel conduct against an individual or firm that has been granted leniency if they fully cooperate with the commission’s investigation and proceedings.

A summary of key changes proposed to the leniency policy and questions that submitters may want to address can be found on the commission’s website.

Submissions on the draft policy will close on February 10. The commission intends to publish its updated policy in April along with updated FAQs and fact sheet. 

It will hold a seminar on January 27 at its Auckland office to talk through the key changes and answer any questions submitters may have. This seminar will also be live-streamed.

Cartels and the law

The Commerce Commission says cartels can lead to consumers, including businesses, paying higher prices or having reduced choice and quality. 

A cartel is when two or more businesses agree not to compete with each other through conduct including price-fixing, dividing up markets, rigging bids or restricting the output of goods and services. In the past, the airline and shipping industries have come under scrutiny.

Any cartel entered into after April 8 will be subject to the new law, including up to seven years’ imprisonment.

If a cartel was entered into before April 8, conduct after that date will be subject to the criminal legislation.

Leniency is a key tool in detecting and deterring cartels in New Zealand. It is widely used around the world to uncover cartels. 

To encourage reporting of cartels, leniency is offered to the first member of a cartel that tells the commission about its operation and provides evidence about the cartel.

This destabilises cartels and maximises the opportunities for the commission to stop the harmful effects from cartels. The regulator also offers use of an anonymous whistleblower tool.