Court endorses penalty in trans-Tasman cartel case

Court endorses penalty in trans-Tasman cartel case

Issued 22 August 2013
Release No. 13

Visy Board Pty Ltd (Visy) has been ordered to pay a penalty of $3.6 million in the High Court in Auckland today, and its former senior executive John Carroll $25,000, for breaching the Commerce Act by being involved in price fixing.

As part of a pre-trial settlement, Visy admitted liability for its role in illegal arrangements with Amcor Ltd, a competitor, to divide certain trans-Tasman corrugated fibreboard packaging customers (Coca Cola, Goodman Fielder and Fonterra) between them, in breach of the price fixing prohibition in the Commerce Act. Mr Carroll admitted being knowingly concerned in, or party to, Visy’s conduct in relation to the Fonterra tender for corrugated fibreboard packaging.

“The Commission is very pleased to have successfully resolved its long running case against these defendants,” said Commerce Commission Chairman Dr Mark Berry.

“As the Court of Appeal explained when issuing a ruling on this case last year, ‘cartel conduct has a damaging impact upon society’. Preventing price fixing is important to protect New Zealanders from anti-competitive conduct, and the substantial penalty the Court awarded should be a deterrent to others who might breach the Act,” said Dr Berry.

The Commission’s case against Visy involved the company’s conduct in relation to three tenders in the periods January to March 2001 for Coca Cola, mid 2001 for Goodman Fielder and April to July 2004 for Fonterra.

The case follows earlier proceedings by the Australian Competition and Consumer Commission in which Visy, and Mr Carroll (among other defendants), admitted that they were parties to a cartel with Amcor in the Australian corrugated fibreboard packaging market.

The Federal Court of Australia imposed penalties of AU$36 million against Visy and AU$500,000 against Mr Carroll. Both Visy and Mr Carroll objected to the Commission pursuing its claims in New Zealand. In August 2012, the Court of Appeal ruled that the High Court had jurisdiction to hear the Commission’s claims against Visy.

In addition to the $3.6 million penalty, Visy will pay $50,000 towards the Commission’s costs. The penalty, which was recommended to the Court by both the Commission and Visy, included a discount for Visy’s admissions.

Background

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/

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