The Commerce Commission has today filed charges in New Zealand’s first ever criminal cartel prosecution, alleging that two construction companies and its directors engaged in bid-rigging when tendering for publicly funded construction contracts. This marks a key milestone as it is the first criminal cartel prosecution brought by the Commission since cartels were criminalised in April 2021.
The Commission’s press release alleges that the defendants (both the companies and their directors) “colluded to rig bids for infrastructure projects in Auckland”. As the matter is currently before the Court, no further information is currently available regarding the charges. If convicted, the companies could face fines not exceeding the greater or $10 million, three times the value of any commercial gain resulting from the cartel conduct or 10% of turnover if each accounting period in which the conduct occurred. The directors could individually face a maximum fine of $500,000 (each) and up to seven years imprisonment.
This prosecution is a timely reminder that the Commission is prepared to take serious enforcement action against cartel conduct. John Small, the Chair of Commission, has indicated the Commission intends these proceedings to send a strong message that it will not tolerate cartel conduct, adding that “[t]he Commission will not hesitate to bring criminal proceedings in appropriate cases”. Notably, the Commission has moved relatively quickly to bring its first cartel prosecution. By comparison, in Australia, while cartel conduct was criminalised in July 2009 the first prosecution against a body corporate was only brought in 2016.
Education about cartels and cartel conduct, and the identification of potential risk areas, has never been more important for organisations and their staff. Organisations that have not invested in education for staff on cartel conduct, along with sound compliance processes, will be the most at risk of criminal penalties for cartel conduct (alongside their employees).
Our competition experts will be following the case closely and will provide further updates once more information is available. Please contact our team if you have any questions regarding cartel conduct or need assistance with educating staff, reviewing policies and other compliance processes, and otherwise identifying risk areas under the Commerce Act.
This article was co-authored by Jovana Nedeljkov, Senior Solicitor, and Soomin Yang, Solicitor, from our Corporate and Commercial team.
