Cartel criminalisation back on the agenda

Cartel criminalisation is back on the agenda following the introduction of the Commerce (Criminalisation of Cartels) Amendment Bill into Parliament yesterday.

The bill introduces a new criminal cartel offence whose key element is intention to engage in cartel conduct. In addition to the maximum civil pecuniary penalties, individuals found guilty of the new offence face up to seven years’ imprisonment.

Criminalisation for cartel conduct was originally included in the amendments to the Commerce Act proposed in 2011, but was removed from the draft legislation in 2015 due to concerns about the potential ‘chilling effect on pro-competitive behaviour.’  The amendments (without the criminal offence) came into force in August last year.

The new offence largely replicates the drafting in the 2011 bill.  According to Commerce and Consumer Affairs Minister, Kris Faafoi, the introduction of a criminal cartel offence is necessary as New Zealand’s existing civil regime does not provide sufficient disincentives for cartel conduct: “My hope is that the risk of imprisonment acts as a strong deterrent and reflects the seriousness of the harm that can be caused.”  The explanatory note to the bill points to successful enforcement action taken by the Commerce Commission against domestic and international cartels as evidence that “cartel conduct is active in New Zealand.”

The bill attempts to mitigate business uncertainty that may arise, through a number of measures, one of which is a two-year transitional period before the criminal offence comes into force.  According to the explanatory note to the bill, this would “allow for businesses to learn from experience” under the new civil regime for cartel conduct.

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