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Jail time for cartel conduct in Australia: New Zealand to follow suit?
Just a day after an Australian law change, Minister of Commerce Simon Power has suggested that jail time for cartel conduct is at least being considered in New Zealand.
Both houses of Australia's Federal Parliament have passed the Trade Practices Amendment (Cartel Conduct and Other Measures) Act 2009, which criminalises serious cartel conduct and provides for up to 10 years jail time.
The new law introduces two new criminal and two new civil cartel offences.
The new criminal offences are:
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making or giving effect to a contract, arrangement or understanding containing a cartel provision; and
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entering into a contract, arrangement or understanding with the knowledge or belief that it contains a cartel provision.
Civil offences mirror the criminal offences but do not require the fault elements of intention and knowledge or belief to be established.
What is cartel conduct?
Cartel conduct includes provisions that:
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Fix prices
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Restrict outputs in the production or supply chain
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Allocate customers, suppliers or territories
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Rig bids.
Implications
The Australian legislation has immediate implications for New Zealand companies and individuals operating on both sides of the Tasman. To the extent that New Zealand companies carrying on business in Australia are involved in cartel conduct, individuals will be directly exposed to the risk of prosecution and hence jail time.
The amendment contains ten 'exceptions' which identify circumstances in which a person who makes or gives effect to a cartel provision will not contravene the Act. However, the exceptions are narrow and technical, particularly the joint venture exception which raises potential issues around many day to day decisions made by, or on behalf of, joint ventures.
Australia's move follows an international trend – epitomised by the United States – to criminalise cartel conduct and send cartelists to jail, and New Zealand may well follow in due course.
The provisions introducing the new cartel offences will come into effect 28 days after the Cartel Amendment receives Royal Assent.
For further information, please contact your usual Bell Gully adviser or:
Phil Taylor
Partner
Torrin Crowther
Partner
Simon Ladd
Partner
Jenny Stevens
Partner
David Blacktop
Senior Associate
Disclaimer
This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
