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NEW ONLINE COMPETITION LAW GUIDANCE FOR CONSTRUCTION COMPANIES
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The Commerce Commission is continuing to promote competition law compliance within the construction industry with the launch of its new ‘Construction Site’ website. The website is targeted specifically at the construction industry and includes user-friendly guidance on competition law, consumer law and consumer credit law compliance. The website also promotes a series of free ‘build your knowledge’ workshops that the Commission is planning to run.

Construction industry risks

The Commission’s focus on the construction industry started in 2010 when it undertook research on a group of commercial building contractors. The Commission’s research revealed there was a low level of understanding as to what constitutes unlawful anti-competitive conduct under the Commerce Act and that cover pricing was being practised by some companies. 

Overseas experience has indicated the construction industry is a high-risk sector for price fixing and bid rigging conduct and there have been a number of high-profile cases in recent years involving the sector.  In launching its website the Commission has highlighted the specific risks that can be associated in the wake of natural disasters such as the Canterbury earthquakes.  These include:

  • fraud
  • corruption
  • anti-competitive practices. 

The Commission also emphasised the importance of the construction industry to New Zealand’s economy in light of the Canterbury rebuild and increased activity in Auckland. 

The launch of the Commission’s website follows a High Court decision in March this year which resulted in a $1.85 million penalty being imposed on Carter Holt Harvey for price fixing in the Auckland commercial timber market. The Commission had become aware of the conduct through a leniency application made by Fletcher Distribution, operating as Placemakers. The conduct at issue related to an understanding that ran for six months, that the parties would price MSG8 timber at cost plus an 8% margin. 

Cartel criminalisation still on the horizon


The risks associated with participating in cartel conduct (price fixing, bid rigging, market allocation and output restrictions) are set to increase further when the Commerce (Cartels and Other Matters) Amendment Bill is passed into law. 

The Bill, which is expected to be passed in to law  this year, includes a number of amendments to the Commerce Act, including;

  • proposals to criminalise cartel conduct
  • replacing the current joint venture exemption with a new ‘collaborative activity’ exemption. 

The Commission has already published draft Competitor Collaboration Guidelines which provide a general overview of the proposed amendments to the Commerce Act. The Commission will finalise these guidelines ahead of the new law coming into force. 

 

Click here to view the Construction Site website. 


If you have any questions about issues this article raises, contact one of our law specialists who would be pleased to assist you. 


Chris Booth, Construction partner
Hayden Wilson, Competition law partner

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