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Cartels are now a crime in New Zealand

Home Insights Cartels are now a crime in New Zealand

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Contributed by: Troy Pilkington, Bradley Aburn and Lina Kim

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Published on: April 08, 2021


Cartel Criminalisation

After a decade of debate and a two-year transitional period, today, cartel conduct is New Zealand's latest criminal offence. Individuals and businesses who "intentionally" engage in cartels can now be criminally prosecuted with a maximum sentence of:

  • up to 7 years imprisonment; and/or

  • for individuals, a criminal fine of up to $500,000 and for businesses a criminal fine up to the greater of $10 million; three times the commercial gain from the offending; or 10% of the company's turnover for businesses.

These criminal sanctions will apply in parallel to the existing civil sanctions for cartel conduct.
Cartels are the most serious types of anti-competitive agreements, where two or more competing businesses agree, whether in writing or otherwise, not to compete with each other. Cartels include agreements to:  

Fix Prices

Allocate Markets

Restrict Output

What prices (incl. fees, rebates, discounts) either party will charge customers (or buy from suppliers for) in competition with each other.

What customers or territories each will supply, or will not supply, in competition with each other.

The amount of goods or services that they supply (or buy) in competition with each other.


There are, however, some exceptions from the cartel prohibition where there may be legitimate reasons for the inclusion of a cartel provision including the: 

Collaborative Activities Exception

For cartel provisions that are objectively reasonably necessary for the furtherance of a joint commercial activity that 2+ businesses are conducting together, as long as the joint activity does not have the dominant purpose of lessening competition between participants.

Vertical Supply Exception

For cartel provisions that relate to the "vertical" supply of a good or service from a supplier to a customer, provided that the provision does not have the dominant purpose of lessening competition between the customer and supplier.

Joint Buying Exception

For price fixing provisions (a type of cartel provision) that set the price that businesses jointly procure goods or services from a supplier for as part of a legitimate buying group.

It will be a defence to the criminal offence if an individual reasonably believed that any of the exceptions to cartel conduct (including the collaborative activities exception, vertical supply contracts exception, joint buying exception) applied. However, the Act makes it clear that the defence will not apply if the individual's belief is based on "ignorance, or mistake, of any matter of law". For more detailed commentary on the substantive provisions of the Act, see our previous alert here. 

Awareness Campaign

Prior to the new offence coming into effect, the Commerce Commission (NZCC) undertook an educational campaign to increase awareness of cartel conduct and the new criminal penalties. Last November, NZCC also ran a free webinar to remind the business community "what cartel behaviour looks like." Recently, there has also been heightened media attention on the new offence, emphasising the gravity of engaging in cartel conduct.
NZCC Chair, Anna Rawlings commented, “Our videos and advertisements appeared in national news media and across social media channels and drove record levels of traffic to the Commission website where they can be viewed alongside our written guidance. Now more than ever, businesses and their staff need to make sure they understand the kind of commercial arrangements they should avoid to stay on the right side of cartel laws."

Leniency and Immunity

Today, the NZCC also released an updated Cartel Leniency and Immunity Policy (Policy) for individuals and businesses wishing to report cartel conduct. The Policy says the NZCC will offer conditional leniency and/or immunity to the "first participant in cartel conduct who tells the NZCC about the cartel conduct and provides evidence."  While there are a number of unanswered questions on how the Policy might apply in practice, two things are certain:

  • The NZCC will continue to make decisions on civil leniency and cooperation; while

  • Only the Solicitor-General will be able to make decisions on criminal immunity for cartel offences, in accordance with the Solicitor-General’s Prosecution Guidelines. (The NZCC will only be able to make recommendations to the Solicitor-General to grant immunity from criminal prosecution). 

Investigative Powers and Procedure

As a result of criminalisation, the NZCC will now have access to new investigative powers under the Search and Surveillance Act 2012, such as the ability to apply to the Court for surveillance device warrants (i.e. "wiretaps") by demonstrating to the Court reasonable grounds for suspecting that a cartel offence has been, is, or will be committed, and that the use of a warrant will obtain relevant evidence.
We anticipate that given the greater procedural rights afforded to criminal suspects/defendants, the NZCC is likely to treat all cartel investigations as if they are criminal investigations until such point in time that the NZCC forms the view that they are unable to establish the offence to the requisite criminal standard of proven beyond reasonable doubt.
If you have any questions, please contact one of the authors below. 

This article is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice. If you require any advice or further information on the subject matter of this newsletter, please contact the partner/solicitor in the firm who normally advises you, or alternatively contact one of the partners listed below.

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