Possible Cartel Conduct Sparks Compliance Advice

The Commerce Commission is reminding trade organisations and members of their obligations under the Commerce Act after issuing a compliance advice letter to NZ Trade Group (NZTG) about conduct that had the potential to harm competition.

Vanessa Horne, General Manager Competition, Fair Trading and Credit said the Commission had investigated allegations of anti-competitive conduct by the membership group, which describes itself as the country’s leading network of electricians. “There were two principal areas of concern. The first related to the group’s terms and conditions which contained a non-solicitation clause explicitly prohibiting members from actively soliciting other members’ customers, employees and contractors.

“The second related to the NZTG’s private Facebook group. Several posts included discussions about rates, with members in some cases appearing to agree to price-match.

“In both cases, the conduct raised issues under section 30 of the Act which prohibits any person entering into a contract or arrangement, or arriving at an understanding, that contains a cartel provision.”

As a result of the concerns raised by the Commission, NZTG has amended the terms and conditions of membership and included a permanent banner on its Facebook group, warning against discussion and conduct that could be considered anti-competitive.

Ms Horne said while prompt NZTG action had concluded the investigation in this case, membership organisations should take this as an opportunity to review their own practices. “Trade associations, professional bodies and their members should be aware they could be held liable under the Commerce Act if conduct is shown to be anti-competitive. Penalties for breaching the Commerce Act can be severe, including potential imprisonment.”

A copy of the compliance advice letter is available on the Commission's case register.

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