Criminalisation of cartels 2018-19
The Commerce (Criminalisation of Cartels) Amendment Act 2019 amends the Commerce Act 1986 to introduce a criminal offence for cartel conduct.
Objectives of the Amendment Act
On 8 April 2019, the Commerce (Criminalisation of Cartels) Amendment Act 2019 received Royal assent. The Amendment Act has a two year transitional period and will come into force in April 2021.
The specific policy objectives for introducing criminalisation for cartels are to:
- promote detection and deterrence of cartels — while ensuring that efficiency enhancing collaborative activity is not deterred
- improve cartel enforcement by the Commerce Commission, and
- facilitate New Zealand’s contribution to enforcement efforts against global cartels.
These objectives are to be read in light of the purpose of the Commerce Act 1986, which is to promote competition in markets for the long-term benefits of consumers within New Zealand.
The Amendment Act is available on the government legislation website.
The new cartel offence
The new cartel offence is targeted at the individuals who are the decision-makers for the cartel and their corporations. The key element of the offence is the requirement to show ‘intention’ to engage in cartel conduct.
The maximum fines are the same as the maximum pecuniary penalties that may be imposed under the civil cartels regime, with the additional sanction of up to 7 years imprisonment in the case of individuals.
There are also other elements in the Amendment Act that are designed to mitigate business uncertainty and compliance costs from the new criminal regime.
These include the following:
- existing exceptions and exemptions in the Act to the civil prohibition for cartel conduct will also apply to the new criminal offence, including the exceptions relating to:
- collaborative activities (such as joint ventures), and
- specified international shipping activities (such as vessel-sharing agreements)
- new defences in the new section 82C provide for circumstances where a defendant is mistaken in fact as to whether one or more of the exceptions applied
- a 2-year transitional period before the criminal offence comes into force, to allow for businesses to learn from experience under the existing civil regime for cartel conduct that came into effect in August 2017.
On 14 February 2018, the Cabinet Economic Development Committee agreed to amend the Commerce Act to introduce a new criminal offence for cartels.
On 5 December 2018, the Cabinet Economic Development Committee agreed technical amendments to be made to the Bill by supplementary order paper.
On 19 February 2019, the Cabinet Legislation Committee approved the supplementary order paper for introduction to the House.
Further information about the passage of the Amendment Act is available on the NZ Parliament website.