Court of Appeal clears the way for trans-Tasman cartel case

Press Release – Commerce Commission

The Court of Appeal has issued a ruling widening the Commerce Commission’s claims against Australian packaging company Visy Board Pty Ltd, for its part in an alleged cardboard packaging price-fixing cartel.
Media Release

Issued 31 August 2012

Release No. 17

Court of Appeal clears the way for trans-Tasman cartel case

The Court of Appeal has issued a ruling widening the Commerce Commission’s claims against Australian packaging company Visy Board Pty Ltd, for its part in an alleged cardboard packaging price-fixing cartel.

The Commission’s case claims that Visy Board and its competitor Amcor Ltd formed an illegal arrangement to divide trans-Tasman corrugated fibreboard packaging markets between them, and to fix packaging prices for New Zealand. The Commission claims that, by colluding, the packaging companies decided in advance which of them would win customer tenders, and had ‘compensation’ arrangements between them when competition on tenders occurred.

The Court of Appeal has overturned High Court findings which had limited the case against Visy Board, and has reinstated all of the Commission’s claims against the company. The Court of Appeal has also upheld the High Court’s findings that the Commission can pursue certain claims against Visy Board senior executive, Rod Carroll.

In reaching its decision, the Court of Appeal reiterated that “cartel conduct has a damaging impact upon society”, and emphasised that the Commerce Act’s purpose is to prevent harm to New Zealanders from anti-competitive conduct.

In light of this purpose, the Court held that the Act enables the Commission to take enforcement action against a person that engages in conduct offshore, if that person is resident or carrying on business in New Zealand, and their conduct is targeted towards New Zealand.

“This is an important ruling for the Commission,” said Chair Dr Mark Berry. “We challenged the High Court decision because we felt it set an unrealistically high bar for us to take enforcement action against overseas defendants. In particular, the Court clarified that if a defendant is resident Page 2 of 2 1422156.1 in or carrying on business in New Zealand, then its conduct offshore will be covered by the Commerce Act provided that conduct ’relates to’ New Zealand markets. This clarification will help us take effective enforcement action against cartel conduct targeting New Zealand.”

As the case remains before the courts, the Commission can make no further comment at this time.

Background
The Commission’s case follows earlier proceedings by the Australian Competition and Consumer Commission, in which Visy Board and Mr Carroll admitted that they were parties to a cartel with their competitor Amcor Ltd in the corrugated fibreboard packaging market.

The Federal Court of Australia imposed penalties of AU$36 million against Visy Board and its owner, Richard Pratt, and AU$500,000 against Mr Carroll. But Visy Board and Mr Carroll deny that the cartel arrangements extended to New Zealand and objected to the Commission pursuing its claims in New Zealand.

Cartels are arrangements between competitors that breach Part 2 of the Commerce Act. Cartel conduct may include price-fixing, excluding competitors, colluding on tenders, bid rigging and market sharing. Cartels often operate informally and in secret. Cartel conduct is recognised as being a seriously damaging form of anti-competitive behaviour.

The Commission operates a Cartel Leniency Policy. The Cartel Leniency Policy offers individuals or businesses involved in a cartel the opportunity to be granted conditional immunity from Commission prosecution. Immunity is conditional because it depends on the cartel member continuing to provide information and cooperate with the Commission’s investigation and any court proceedings.

Immunity protects a cartel member from legal action by the Commission, however, it does not prevent third parties from making claims for damages. The Commission will grant immunity to the first member of a cartel to approach us, provided they meet the immunity requirements.

You can read more about the Commission’s Leniency policy at http://www.comcom.govt.nz/leniency-policy-for-cartels/
ENDS

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