Faafoi revives plan to impose criminal sanctions on cartels

Thursday 15th February 2018

Commerce and Consumer Affairs Minister Kris Faafoi today tabled legislation reviving plans that would criminalise cartels, attaching harsher penalties including the threat of jail.

The Commerce (Criminalisation of Cartels) Amendment Bill will make it a criminal offence to engage in a cartel, adding the threat of imprisonment which Faafoi said he hoped would be a "strong deterrent" with existing civil penalties too weak to deter the anticompetitive behaviour. The law would run the criminal regime in tandem with the civil one, threatening up to seven years' jail and/or a fine of up to $500,000 for an individual.

"This government wants to take a strong stance against business people who collude against the interests of consumers," Faafoi said in a statement. "Many of our trading partners, including Australia, have a criminal offence for cartel conduct."

The move revives plans to criminalise cartels that were dropped by former Commerce Minister Paul Goldsmith who preferred leaving New Zealand out of step with the US, UK, Canada and Australia, for fear it would have a chilling effect on business. The Australian Competition and Consumer Commission today laid criminal charges against The Country Care Group, managing director Robert Hogan and former employee Cameron Harrison in the first criminal prosecution of an Australian corporation under the cartel legislation.

New Zealand's proposed law won't impose criminal sanctions until two years after the Royal assent, which Faafoi said in a Cabinet paper would give the Commerce Commission and Crown Law enough time to get the implementation measures in place and give businesses the headroom to ensure compliance.

The proposed legislation would allow an 'honest belief defence' someone in a collaborative activity argue they "believed that the cartel provision was reasonably necessary", the paper said. That defence could also be extended to where a defendant was mistaken in relation to shipping line exemptions.

The Treasury and Commerce Commission both supported the criminalisation, although the Treasury was unsure of the fiscal cost and the commission took issue with "the breadth and complexity of the defences proposed".

The bill is expected to pass into law by April next year.

(BusinessDesk)

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