Criminalisation of cartel conduct proposed once again
The Government has introduced legislation to criminalise cartel conduct under the Commerce Act 1986.
The Commerce (Criminalisation of Cartels) Amendment Bill was introduced to Parliament on 15 February 2018 and is expected to pass into law by April 2019. The proposed offence would target individuals who are the decision makers behind cartel arrangements, such as directors, and impose substantial penalties, including up to seven years imprisonment.
Cartel conduct has been prohibited since August 2017 when the Commerce (Cartels and Other Matters) Amendment Act 2017 came into force. Its definition includes arrangements between competitors to fix prices, restrict output or allocate markets (eg geographically).
Although cartel conduct is prohibited, it is not currently a criminal offence. A proposal by the previous Government to criminalise cartel conduct was abandoned in 2015. This was due to the concern that criminalisation could having a chilling effect on pro-competitive behaviour in New Zealand.
The new Government has sought to revive criminalisation on the basis that the currently civil regime fails to adequately disincentivise cartel conduct and places New Zealand out of step with overseas jurisdictions.
If passed into law, the cartel criminal offence will not come into force for another two years.
This latest development serves as a reminder that companies need to remain conscious of the cartel provisions under the Commerce Act when they negotiate contracts and interact with their competitors.
Want to know more?
If you have any questions about this or any other competition law matter, please do not hesitate to contact our competition expert, Sarah Simmers.