By Tony Johnson - 26 Mar 2010
The Government recently signaled a strong possibility of
creating criminal offences for anti-competitive activities.
Currently, proceedings brought under the Commerce Act for
anti-competitive activities are civil proceedings and the penalties
are financial.
Prior to May 2001, if the Court accepted that inappropriate
anti-competitive activity had occurred, it could impose pecuniary
penalties of up to
- $100,000 against individuals
- $300,000 against body corporates.
In May 2001 the maximum penalties were substantially
increased. For a body corporate, the Court can now impose
whatever sum is the greatest of:
- $10,000,000 or
- Three times the value of any commercial gain or
- 10% of the turnover of the body corporate (if commercial gain
cannot be readily ascertained)
For individuals, the Court can impose a penalty of up to
$500,000.
Having regard to these already substantial penalties, there are
opposing views as to whether criminalization is appropriate.
Arguments against criminalization
- The cost of introducing such a regime compared to actual
measurable benefits
- The difficulty of determining appropriate prison sentences
- The fact that the size of New Zealand's economy means that
interaction between competitors at least at some level is
inevitable.
Arguments in favour of criminalization
- This sort of regime already exists with our major trading
partners
- There needs to be a substantive deterrent
- It is difficult to truly establish potential losses to the
public from anti-competitive activities.
We expect the Government to comment further on this issue
soon.
If you have any queries or if you are approached by the Commerce
Commission about these types of issues, please contact Tony Johnson.