Collusion warning for businesses

The Commerce Commission is warning all businesses supplying essential services during lockdown to adhere to their obligations under the Commerce Act.

The regulator recognises the impact of the Covid-19 outbreak is significant for companies, consumers and the economy, and that some businesses able to operate under level four may need to co-operate to ensure New Zealanders continue to be supplied with essential goods and services.

For example, this could be sharing staff or distribution networks or taking other measures to ensure security of supply.

However, they also need to be aware of what they can and cannot do when talking to competitors. The Commerce Act prohibits anti-competitive agreements between firms, such as agreements to fix prices, allocate markets or restrict output.

The commission says it will not tolerate unscrupulous businesses using the pandemics as an opportunity for non-essential collusion between competitors or anti-competitive behaviour. 

This includes competitors agreeing on pricing and pricing intentions, allocating markets or its customers or restricting the output of goods or services when it is not necessary. For example, competing tradies should not agree prices they will each charge for the provision of essential repair services during lockdown.

The commission adds it is committed to taking enforcement action to prevent consumer harm and can take action to stop such conduct or seek appropriate penalties when identified. Cartel conduct is punishable with a term of imprisonment of up to seven years and fines.

Businesses or individuals wishing to report cartel conduct should contact the regulator as soon as possible. 

The commission, which has a Covid-19 section online , can grant leniency to the first member of a cartel to approach it, provided it meet certain requirements.