The legislation, if passed, will make engaging in ‘cartel conduct’ a criminal offence punishable by up to seven years imprisonment or fines of $500,000 for individuals. Companies would face fines of up to $10 million, three times the commercial gain resulting from the offence, or 10% of the turnover of the company and any related companies.
The legislation essentially revives and updates a proposal that was considered, and then abandoned, by the previous Government, amid concerns that it would have a chilling effect on business conduct. An important change is the removal of what was termed the ‘honest belief’ defence, which provided a defence to criminal conviction if the defendant ‘honestly believed’ that their conduct was covered by an exemption to the Act.
Criminal penalties for cartel conduct are common overseas, particularly in the countries that many New Zealand companies operate. Nevertheless, the prospect of significant criminal penalties in this area will be of concern to many businesses and trade organisations.
In releasing the legislation, Minister of Commerce and Consumer Affairs Hon Kris Faafoi said that ‘Price fixing and other cartel conduct harms honest New Zealand businesses, consumers and the wider economy. It stifles emerging businesses, impacts on consumers if they are not getting the best deal the market could offer, and limits growth by undermining competition.’
A copy of the bill can be found here. The new Bill is expected to have its first reading in Parliament next week, where it will be referred to a Select Committee and public submissions will be sought.
If you or your business would like to know more, or would like to make a submission on the Bill, please contact one of our experts.