Commission issues anti-collusion reminder to businesses supplying essential services*
The Commerce Commission is reminding all businesses supplying essential services in the current nationwide COVID-19 lockdown of their obligations under the Commerce Act.
The Commission recognises that the impact of the COVID-19 outbreak is significant for businesses, consumers and the economy, and that some businesses able to operate under level 4 restrictions may need to cooperate to ensure New Zealanders continue to be supplied with essential goods and services, for example, to share staff or distribution networks or take other measures to ensure security of supply.
However, they also need to be aware of what they can and cannot do when talking to their competitors. The Commerce Act prohibits anti-competitive agreements between firms such as agreements to fix prices, allocate markets or restrict output.
The Commission will not tolerate unscrupulous businesses using COVID-19 as an opportunity for non-essential collusion between competitors or anti-competitive behaviour. This includes competitors agreeing on pricing/pricing intentions, allocating markets or its customers or restricting the output of goods or services where it is not necessary in the current situation. For example, competing tradespeople should not agree the prices they will each charge for the provision of essential repair services during a lockdown.
The Commission 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 7 years and penalties for businesses involved.
Businesses or individuals wishing to report cartel conduct should contact the Commission as soon as possible. The Commission can grant leniency to the first member of a cartel to approach it, provided they meet the requirements for leniency. More details on the leniency policy can be found on our website. Businesses and individuals can also use the Commission’s anonymous whistleblower tool.
Further guidance on business collaborations under COVID-19 can also be found on our website.
The Commission advises all businesses providing essential services to engage with our guidance to ensure they stay on the right side of the law.
As of 8 April 2021, cartel conduct is now punishable by a maximum penalty of a term of imprisonment of up to 7 years, after the Commerce (Criminalisation of Cartels) Amendment Act 2019 came into effect.
Individuals can be fined up to $500,000 and, as noted above, may now be subject to a term of imprisonment. Companies can be fined up to $10 million, three times commercial gain or 10% of turnover per year per breach.
A cartel is where two or more businesses agree not to compete with each other. This conduct can take many forms, including price fixing, dividing up markets, rigging bids or restricting output of goods and services. You can find more detail on cartels on our website.