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Draft guidance on immunity applications for cartel conduct released

Home Insights Draft guidance on immunity applications for cartel conduct released

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Contributed by: Sarah Keene, Troy Pilkington, Bradley Aburn and Chris Brunt

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Published on: December 18, 2020

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The New Zealand Commerce Commission (NZCC) and Crown Law this morning released draft revised guidelines regarding changes to the immunity and leniency policies for dealing with cartel conduct once it is criminalised in April 2021. The draft revised guidelines are available here and here. As set out in our previous alert (available here), cartel conduct between competitors is set to become a criminal offence, punishable by up to seven years imprisonment, from 8 April next year.
 
As is the common practice of competition law regulators around the world, the first member of a cartel to report it to the NZCC may be offered immunity from civil prosecution in relation to that conduct. However, in New Zealand, the only member of Government that is permitted to grant immunity from criminal prosecution is the Solicitor General. Accordingly, the revised guidelines contemplate a two stage process whereby:
 

  • as is now the case, a participant in potential cartel conduct seeks a "marker" regarding a potential cartel and then, if that marker is granted, the NZCC receives a "proffer" containing information regarding the potentially unlawful behaviour, and on the basis of the information received, determines to grant immunity from civil proceedings brought by the NZCC; and
  • in a newly created stage, the NZCC makes a recommendation to the Solicitor General regarding granting immunity for that participant in respect of criminal prosecution, as well.

 
The Solicitor General has a statutory obligation to exercise independent discretion when determining whether to grant criminal immunity for a leniency applicant. The introduction of a second discretionary decision-making body into this process does create additional uncertainty for parties considering whether to apply for immunity. Cognisant of that risk, the Crown Law guidelines note that "these guidelines also recognise that clarity, predictability and transparency are critical to this process."
 
Important aspects of this new scheme that warrant further attention include:
 

  • the NZCC will remain the sole point of contact for applicants, with no direct engagement with the Solicitor General required (this appears to all be done by the NZCC). Applicants will be informed whether they have been granted civil and criminal immunity at the same time;
  • the NZCC will not recommend that the Solicitor General grant criminal immunity unless the conduct is "serious", and the evidence provided "could not be reasonably obtained elsewhere" and is "likely to significantly strengthen any potential criminal prosecution case". This criterion appears to indicate that the NZCC will only recommend Solicitor General immunity on a "needs only" basis (ie where criminal prosecution is likely), rather than whenever they offer civil immunity. Given that it will commonly be unclear at the outset of an NZCC investigation whether a matter is suitable for criminal prosecution – indeed, that is the purpose of the NZCC's investigation process – there may be good arguments that criminal and civil immunity should always go "hand in hand"; and
  • what, if any, actions the NZCC would take in circumstances where it grants civil immunity but, exercising their independent discretion, the Solicitor General does not grant criminal immunity (for example, whether the NZCC would continue its investigation, and whether there is any prospect of the NZCC bringing criminal proceedings notwithstanding it has granted civil immunity). The guidelines appear to be silent on this point.

 
The NZCC has called for submissions on the draft guidelines by 10 February 2021. It will also be hosting a live stream on a seminar as part of this consultation process which can be accessed here on 27 January 2021 (further details are available here).
 
If you would like to discuss how the proposed policy could affect your business, or you would like assistance in considering your options for responding to the NZCC's request for consultation, please get in touch with Troy Pilkington or Sarah Keene.

Read more:
Competition Update
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