Air NZ Fights Commerce Commission Gagging Orders

Media Release
19 March 2008

Air New Zealand Fights Commerce Commission Gagging Orders

Air New Zealand has gone to the High Court today to stop the Commerce Commission withholding evidence in its air cargo litigation.

General Counsel John Blair says it is extremely disappointing that Air New Zealand has had to resort to unnecessary legal action to stop Commerce Commission tactics clearly designed to hinder the airline’s defence.

“Air New Zealand has no issue with the Commerce Commission conducting its investigation. In fact, we share the same view that cartels are insidious and anti-competitive and that price fixing activities should be prosecuted by the appropriate authorities.”

Mr Blair says Air New Zealand has never condoned anti-competitive conduct and has cooperated fully with the Commerce Commission throughout its investigation, providing hundreds of thousands of documents and making many current and former employees available for interview from around the world.

“Despite extensive reviews of our own files and interviews with key staff, Air New Zealand has not been able to identify any evidence of price-fixing or cartel behaviour. We have repeatedly asked the Commerce Commission to present us with any evidence to indicate that Air New Zealand has breached any laws. To date they have been either unwilling or unable to do so and it is regrettable that we have had to resort to the Courts even to be able to speak freely to our own employees,” he says.

In the course of interviewing some current and former Air New Zealand staff, the Commerce Commission issued “Section 100” orders. These make all such interviews confidential during the course of the Commission’s investigations, with a breach punishable by fines. The result is that Air New Zealand cannot be told of matters that the Commerce Commission’s investigators have claimed during interviews. For example, if they were saying that there are allegations by Qantas staff about Air New Zealand employees, or describing how the Commission believes pricing decisions were made, Air New Zealand does not have access to that important information . This leaves Air New Zealand unable to defend itself against any such secret allegations.

“This tactic of frustrating preparation of the defence underlines the Commerce Commission’s preoccupation with ‘winning’ litigation and securing fines and headlines. They have lost sight of the fact that the proper role of a regulator involves the fair and proper administration of justice. The considerable powers of the Commission should be used to get to the truth as quickly and efficiently as possible, not deployed in dubious tactics that are about winning but not about justice,” says Mr Blair.

“We support the need for powers to litigate where appropriate but, believe the Commerce Commission’s primary goal should be to ensure competition is healthy, legal, and in the best interests of consumers – rather than their fixation on legal cases at the expense of these objectives. We believe that the Commission would far more likely to achieve its aims engaging constructively with businesses by disclosing rather than withholding the basis for its concerns. This must surely benefit consumers far sooner than tactics simply designed to win Court cases,” he says.

“Early resolution is economically much more efficient than the years of delay and many millions of wasted dollars in legal costs that these proceedings will cause. As the Government reappraises the Commerce Commission, there is possibly a role for an Ombudsman to more efficiently mediate some of these issues which currently end up before the Courts.”

Mr Blair says Air New Zealand’s views are not unknown to the Commerce Commission.

“We have from the outset of this 3 year investigation sought but been denied, a full, frank discussion about their concerns. Even in the tough-minded regulatory environment of the USA, regulators are far more willing to engage on this basis,” he says.

“The appropriate course, now that the Commerce Commission’s investigation is complete and proceedings have been commenced, would be for the Commission to withdraw the Section 100 Orders. Despite a number of requests the Commission has refused,” said Mr Blair.

Air New Zealand has applied for a judicial review of the Commerce Commission’s refusal and an order suspending the proceedings until this issue is resolved.

ENDS

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