19 Jun 2011

Tougher laws proposed on cartels

1:30 pm on 19 June 2011

The Business Round Table says there needs to be solid evidence the benefits of proposed new cartel laws would justify the cost of further hampering business activity.

Draft legislation would crack down on firms and individuals that engage in price-fixing, bid-rigging or dividing up markets to inflate prices.

The draft bill sets out a penalties regime under which individuals could be jailed for a maximum seven years for what it describes as hard-core cartel conduct. No change is proposed for the sanctions against companies.

Commerce Minister Simon Power, who released the draft bill, says it brings New Zealand into line with many of its trading partners, including Australia.

Business Round Table executive director Roger Kerr says businesses are overloaded with regulation, and laws already exist to discourage cartels. In a small community like New Zealand, he says, any cartel-type behaviour is easily detected.

Clearer definition expected

Competition lawyer Andy Matthews says the proposed legislation will help define what constitutes legitimate arrangements when firms work together.

Mr Matthews, a partner at Minter Ellison Rudd Watts, says pro-competitive collaboration among firms is more common that many realise in New Zealand.

He says the Ministry for Economic Development is seeking to clarify what is acceptable in joint ventures and collaboration.

Submissions on the draft bill are due by 22 July, before it is introduced to Parliament.