The Minister of Commerce introduced the Commerce (Cartels and Other Matters) Amendment Bill 2011 into Parliament on 13 October 2011.
One of the principle objectives of the amendment Bill is to introduce criminal sanctions for hard-core cartel behaviour.
Hard-core cartels are formed when rival firms agree to not compete with each other by fixing prices, restricting output, allocating markets or rigging bids. Cartels allow firms to raise their prices above the competitive level without fear of losing customers to rivals. This increases the profits of cartel participants but does not benefit consumers.
Another objective of the amendment Bill is to ensure that firms are not deterred from entering into legitimate, pro-competitive and efficient arrangements with other firms. It does this through a number of new exemptions as well as a clearance mechanism, which enables parties contemplating collaborative conduct to test with the Commerce Commission whether the arrangement would raise concerns.
For many businesses, one of the key exemptions will be the collaborative activity exemption. The exemption is broad and looks to the substance of an arrangement not its form. It would cover arrangements like joint ventures, strategic alliances, syndicated loans and consortium bidding provided the arrangement has a legitimate purpose (i.e. its dominant purpose is not anti-competitive) and the cartel provision is reasonably necessary to achieve that purpose.
In assessing whether conduct is prohibited, the Commerce Commission and the courts are likely to look at business documentation such as emails, file notes, board documents and business agreements, as well as oral evidence from individual persons.
The Commerce Select Committee reported back on its consideration of the Bill, recommending that the Bill be passed with some amendments including repealing the outdated competition regime for international shipping in the Shipping Act. Under the Bill, competition in international shipping would be regulated under the Commerce Act.
The draft regulatory impact statement outlines the recommended policy option to the proposal to make hard-core cartel behaviour a crime.
Paper reporting back on the outcome of consultation on cartel criminalisation and seeking agreement to the development of an exposure draft bill for further consultation.
The exposure draft bill was developed to test whether it was possible to define with sufficient clarity the cartel prohibition and exemptions, such that any downsides of criminalisation would be remedied or at least mitigated.
Discussion document exploring what can be done to better deter and detect cartels.
Bill as introduced to Parliament on 13 October 2011.
Draft immunity guidelines were provided to detail how a leniency regime might work in a criminal context.
Final regulatory impact statement analysing options to promote deterrence of hard-core cartels, while not deterring efficiency enhancing collaborative activity; and to facilitate New Zealand’s active contribution to enforcement efforts against global cartels.
On 13 May 2013, the Commerce Committee tabled its report on the Commerce (Cartels and Other Matters) Amendment Bill.
Minister Power’s press release 'Bill introduced to deter hard-core cartel behaviour' 13 October 2011.
The explanatory material explains the key policy positions that underpin the exposure draft bill; and the reasons why a particular approach has been adopted, both in the design of the regime and the drafting of the bill.
Minister Power’s press release 'Draft bill clarifies law around cartels' 16 June 2011.
Paper seeking Cabinet approval of final policy recommendations and introduction of the Bill.
First reading speech of the Minister of Commerce, Hon Craig Foss, on 24 July 2012.