8 Apr 2021

Law criminalising commercial cartels comes into effect

3:58 pm on 8 April 2021

New laws come that into effect today make it a criminal offence to be part of a commercial cartel.

prisoner hand in jail

Individuals who are convicted could face a seven-year jail sentence or a fine of up to $500,000 (file image). Photo: 123RF

The law was changed last year turning it from a civil to a criminal matter, meaning individuals who are convicted could face a seven-year jail sentence or a fine of up to $500,000.

The sort of behaviour that will attract court attention is price fixing or market manipulation.

Andy Matthews from the law firm Matthews Law said it was on firms to get their commercial arrangements double checked to ensure they were not engaging in any anti-competitive behaviour.

"They need to be generally aware of any dealings with competitors because the law is so broad now that if you reach any form of understanding with someone, even if you've got a legitimate sort of supply arrangement with them, or a franchise arrangement or distribution or you're entering a normal non-compete [clause], you need to get all that sort of stuff checked."

Many historical documents had not been drafted with the current laws in mind, he said.

The law opens the door for whistleblowers to get immunity - if the Solicitor General agrees - or leniency from the Commerce Commission.

Matthews said similar laws had been effective overseas because they allowed issues that would otherwise be confidential to be brought to the attention of regulators.

Last year, a Nelson pharmacy and one of its directors was hit with a fine for nearly $400,000 for price-fixing.