The Cartels and Leniency Review: New Zealand

Enforcement policies and guidance

i Statutory framework and key policies

New Zealand's competition law is contained in the Commerce Act 1986. The Commerce Act is administered by the New Zealand Commerce Commission (NZCC), which is an independent statutory body. The NZCC has powers to investigate and bring proceedings in the High Court against parties it believes have engaged in cartel conduct. The NZCC has no general power to determine a breach of the Commerce Act or impose penalties; that is the role of the court.

New Zealand's cartel laws were amended with effect from August 2017. The cartel prohibition described below (and related exceptions for collaborative activities, vertical supply contracts and joint buying and promotion agreements) replaced the former price-fixing prohibition.

ii Cartel prohibition

The Commerce Act prohibits entering into or giving effect to a contract or arrangement, or arriving at an understanding, that contains a 'cartel provision'. A cartel provision is a provision contained in a contract, arrangement or understanding between competitors in the supply or acquisition of goods or services that has the purpose, effect or likely effect of:

  1. price-fixing;
  2. restricting output; or
  3. market allocation.

Criminal sanctions for cartel conduct were introduced on 8 April 2021. The new criminal regime operates in parallel with the current civil regime.

The NZCC's 2018 Competitor Collaboration Guidelines (the Guidelines) provide a broad overview of the NZCC's proposed approach to the cartel prohibition and related exceptions. The Guidelines are not legally binding.

iii Formal guidance on leniency

The NZCC administers a Cartel Leniency Policy (the Leniency Policy) to encourage whistle-blowing by cartel participants. The Leniency Policy is not part of the Commerce Act and has no formal legal status; it is a policy statement that outlines the NZCC's approach to granting immunity. The Leniency Policy is discussed in Section IV.

iv Other public statements made by the NZCC regarding its cartel enforcement regime

Cartels are an enduring focus area for the NZCC, which is reflected in its annual priorities.

The NZCC has said that detecting and taking action against cartels is a priority 'because competition benefits New Zealanders through lower prices, greater consumer choice, increased business innovation, better product quality, and more investment'.2

Further, cartels are recognised internationally as the most serious form of anticompetitive conduct. Cartels mean that consumers pay more for their goods and services, and businesses pay more for their inputs and can be discouraged from innovating and entering new markets. Cartels undermine New Zealand's international competitiveness, and overall consumer welfare suffers.3

v 'Grey areas' and controversy

The current Leniency Policy has been in operation since July 2021. No controversy has arisen to date.

Cooperation with other jurisdictions

i Coordination with other jurisdictions

The NZCC operates as part of an international network of competition regulators. Given the global reach of many significant cartels, conducting investigations in a coordinated way is an important aspect of international cooperation. Information sharing is a key aspect of cooperation.

The Commerce Act provides for the sharing of information between the NZCC and overseas regulators. This allows the NZCC to enter into a cooperation arrangement with an overseas regulator so that both regulators can share compulsorily acquired information with, and perform searches for, each other. These arrangements may also be entered into between the government of New Zealand and either another government or an international body that establishes the overseas regulator.

The NZCC currently has formal cooperation agreements with its counterparts in Australia, the United Kingdom, Canada and Taiwan.4 Cooperation between competition and consumer regulators around the world increases the efficiency of investigations and the likelihood that illegal conduct is effectively dealt with.5 Further, the NZCC considers that the introduction of the criminal cartel regime will better deter cartel conduct and improve enforcement of the law in New Zealand, including through increased cooperation with other agencies.6

ii Information sharing

Information provided voluntarily to the NZCC under the Leniency Policy, including the applicant's identity, will not be subject to release to overseas regulators under the Commerce Act; however, the NZCC can request a waiver from the applicant to enable the sharing of information with other competition authorities, and for them to be given a waiver to share information with the NZCC.7 In practice, the NZCC now appears to make it a condition of immunity that a leniency applicant provide it with a waiver to facilitate information sharing.8

Confidential information may also be disclosed where the NZCC considers it necessary for the purposes of the cartel investigation or proceedings. If the NZCC proposes to make a disclosure of confidential information, an obligation of confidence will be imposed on the overseas regulator to the extent possible. Where information has been provided, the NZCC must notify both the supplier of the information and the person to whom the information relates. No notification is necessary if an investigation (either locally or overseas) might be compromised or if the maintenance of the law in New Zealand would be prejudiced.

iii Extradition requests

In New Zealand, extradition requires that the conduct in question is an offence, punishable by at least 12 months' imprisonment, both in the foreign jurisdiction and in New Zealand. Now that the Commerce Act contains a cartel offence punishable by seven years' imprisonment, there is no longer an obstacle to the process of extradition. As a result, individuals charged with cartel conduct could be extradited to New Zealand, and individuals charged with comparable provisions in counterpart legislation could be extradited to the relevant jurisdiction.

Exactly how the NZCC is likely to deal with extradition requests from foreign jurisdictions and pursue New Zealand citizens overseas is not yet clear.

iv Extraterritorial discovery

New Zealand courts are not empowered under New Zealand law to order discovery for foreign proceedings. Information submitted by an immunity applicant in a foreign jurisdiction may be subject to discovery orders if it is shared between the NZCC and overseas competition authorities.

The usual rules for discovery apply to shared information in the control of a party other than the NZCC. It is likely that a party would be obliged to discover the contemporaneous (non-privileged) documents relating to the alleged conduct, but there would be a basis for asserting privilege or public interest immunity grounds for non-disclosure of leniency proffers and similar information provided to the NZCC.

Jurisdictional limitations, affirmative defences and exemptions

The Commerce Act applies not only to conduct in New Zealand but also to conduct outside New Zealand that meets the jurisdictional threshold test set out in Section 4 of the Act. Section 4(1) of the Commerce Act states that:

This Act extends to the engaging in conduct outside New Zealand by any person resident or carrying on business in New Zealand to the extent that such conduct affects a market in New Zealand.

Section 4(1) of the Commerce Act requires that both:

  1. the conduct outside New Zealand must be engaged in by a person resident or carrying on business in New Zealand; and
  2. the conduct must affect a market in New Zealand.

In August 2017, the Commerce Act was amended so that a person (person A) engages in conduct in New Zealand if:

  1. any act or omission forming part of the conduct occurs in New Zealand; or
  2. another person (person B) engages in conduct in New Zealand, and the conduct of person B is deemed to be the conduct of person A.

The intention of the amendment was to capture persons based overseas who orchestrate cartel conduct in New Zealand. The 'attributing conduct' provisions deem the conduct of one person to be the conduct of another up the chain of command in certain circumstances. Conduct could be attributed to either a specific individual or an entity.

Members of a group of companies wholly owned and solely controlled by the immunity applicant will usually be able to obtain conditional immunity. In the case of companies only partly owned or controlled by the immunity applicant, the NZCC will assess the nature of the relationship between the group members in determining whether conditional immunity should be granted to some or all of them.

There are three exceptions to the cartel prohibition for:

  1. collaborative activities;
  2. vertical supply contracts; and
  3. joint buying and promotion agreements.

i Collaborative activity exception

The collaborative activity exception covers a broader range of conduct than the previous technical joint venture exception and is intended to protect all collaborative pro-competitive arrangements that may fall within the definition of 'cartel conduct'.

To fall within the collaborative activity exception, a party must show that:

  1. it and one or more parties to the arrangement are carrying on in cooperation an enterprise, venture or other activity, in trade;
  2. the activity is not carried on for the dominant purpose of lessening competition between any two or more of the parties; and
  3. the cartel provision is reasonably necessary for the purpose of the collaborative activity.

While the 'reasonably necessary' standard does not require the parties to show that the cartel provision is essential for the collaborative activity, they must show it is more than merely desirable or preferable.

The Guidelines set out how the NZCC will assess whether a cartel provision is reasonably necessary for the purpose of a collaborative activity. In particular, it will consider:

  1. the interests the parties are trying to protect by using the cartel provision (e.g., reducing risk by deterring freeriding);
  2. the scope of the provision (including its duration, geographic scope, products and markets affected and relationship to the parties' businesses); and
  3. whether practically workable alternatives are available (which would enable the parties to pursue their collaboration).

As far as the purpose element of the collaborative activity exception is concerned, the Guidelines suggest that the following reasons for entering into collaboration are likely to be viewed as valid:

  1. allowing the participants to combine their different capabilities and resources to improve their ability to compete;
  2. attaining economies of scale or scope beyond what either party could achieve individually, again improving the parties' ability to compete; and
  3. achieving an environmental, health and safety or other social welfare purpose unrelated to their individual or collective competitiveness.

ii Clearances for proposed collaborative activities

A voluntary clearance regime is available for parties proposing to enter into an agreement containing a cartel provision that is part of a collaborative activity. The NZCC will give clearance if:

  1. the parties are or will be involved in a collaborative activity;
  2. every cartel provision in the agreement is reasonably necessary for the purpose of the collaborative activity; and
  3. entering into the agreement, or giving effect to any of its provisions, will not have, or be likely to have, the effect of substantially lessening competition in a market.

If clearance is granted by the NZCC, an arrangement cannot be challenged on the basis that it contains a cartel provision or that it substantially lessens competition. To date, no applications for formal clearance have been made.

iii Vertical supply contract exception

The vertical supply contract exception to the cartel prohibition applies where:

  1. a contract is entered into between a supplier of goods or services and a customer of that supplier that contains a cartel provision; and
  2. the cartel provision:
    • relates to the supply or likely supply of goods or services to the customer (including the maximum price at which the customer may resupply the goods or services); and
    • does not have the dominant purpose of lessening competition between the parties to the contract.

iv Joint buying and promotion agreements exception

The joint buying and promotion agreement exception to the cartel prohibition applies where a provision in a contract, arrangement or understanding:

  1. relates to the price for goods or services to be collectively acquired (either directly or indirectly) by some of the parties to the arrangement;
  2. provides for joint advertising of the price for the resupply of goods or services acquired collectively;
  3. provides for a collective negotiation of the price of goods or services that are then purchased individually; or
  4. provides for the purchase of goods or services to occur via an intermediary.

The joint buying and promotion agreements exception only excludes the application of price-fixing, not other forms of cartel conduct.

The Commerce Act does not distinguish between industries in its application of the cartels regime.9

Leniency programmes

i Overview of the Cartel Leniency Policy

The NZCC operates a Cartel Leniency Policy that encourages whistle-blowing by cartel participants. The Policy is an important element of the NZCC's enforcement toolkit, with the NZCC recognising that a leniency policy is the single most effective tool available to detect cartels.

The Policy is not part of the Commerce Act and has no formal legal status; it is a policy statement outlining the NZCC's approach to granting immunity and leniency in return for cooperation by companies and individuals.

An updated version of the Policy was published by the NZCC in July 2021, following the criminalisation of cartel conduct.

How it works

The Policy comprises two parts:

  1. Immunity and leniency: the first cartel participant10 to approach the NZCC has the opportunity to be granted immunity or leniency (conditional immunity) from prosecution by the NZCC. Immunity does not extend to private enforcement action by third parties.
  2. Cooperation: the NZCC may exercise its discretion to take a lower level of enforcement action against subsequent immunity applicants (or, in exceptional cases for individuals, no action at all) in exchange for information and continuing cooperation.

Conditional immunity is available to the first applicant that meets (and continues to meet) the following six conditions:

  1. the party is the first applicant to meet the criteria for conditional immunity;
  2. the party is or was a participant in the cartel;
  3. the party admits that it participated in, or is participating in, a cartel that may breach the relevant sections of the Commerce Act;
  4. the party has either ceased its involvement in the cartel or has informed the NZCC that it will cease its involvement (except where the NZCC requires the applicant to continue to act in particular ways towards the cartel for a specified period to allow necessary evidence to be obtained);
  5. the party has not coerced others to participate in the cartel; and
  6. the party agrees to provide full and continuing cooperation to the NZCC during its investigation of the cartel and any subsequent proceedings.

In the case of corporate applicants, there are additional requirements:11

  1. the application requires an admission that the notified conduct is conduct it is liable for owing to the actions of the business' directors, officers, contractors, agents or employees (rather than independent, isolated acts by individuals);
  2. the business must provide the NZCC with the names of all current and former directors, officers, contractors, agents or employees of the business who were involved in the conduct, stating the current or most recent position held by each individual. The business must provide additional names if it later becomes aware more individuals are involved in the conduct, and it must take all reasonable steps to ensure those involved cooperate fully with the NZCC investigation and any resulting enforcement action;
  3. the business must provide the NZCC with the registered names of all wholly owned and solely controlled companies involved in the conduct and provide that it intends to benefit from derived immunity or leniency. The business must advise the NZCC of any subsequent changes to corporate structure and must take all reasonable steps to ensure companies involved in the conduct cooperate fully with the NZCC investigation and any resulting enforcement action; and
  4. unless agreed otherwise with the NZCC, a corporate applicant must:
    • identify one individual in the organisation, or an external lawyer, as the primary contact point for all matters related to the investigation. The identified person should be available for the duration of the investigation; and
    • commit to giving the NZCC unfettered access (to the best of its ability) to personnel, information and documents, and swiftly respond to any NZCC queries.

Immunity applicants are prioritised according to the time of their application. Only the first cartel participant to approach the NZCC and meet the required criteria is eligible for conditional immunity; however, a subsequent applicant may be able to obtain conditional immunity if the first applicant fails to meet the prescribed conditions agreed with the NZCC. Subsequent applicants who are not eligible for conditional immunity but are willing to cooperate with the NZCC's investigation can benefit from cooperation concessions (i.e., reduced penalties).

Amnesty Plus regime

The NZCC operates an Amnesty Plus regime as part of its Leniency Policy. Where a person is not eligible for conditional immunity for its participation in a cartel (the first cartel) but informs the NZCC of its participation in a second separate cartel of which the NZCC was unaware or where the NZCC has insufficient evidence to warrant taking legal action, that person may be eligible for Amnesty Plus.

Under Amnesty Plus, an applicant is entitled to:

  1. conditional immunity for participation in a second cartel through the marker process; and
  2. the formal status of a cooperating party for the first cartel in which it does not qualify for immunity but agrees to cooperate with the NZCC.

ii How a marker is obtained

The NZCC operates a marker system. A marker is a holding place given to the first person (company or individual) to approach the NZCC requesting immunity regarding a particular cartel. The purpose of obtaining a marker is to give the immunity applicant a limited amount of time to gather the necessary information to demonstrate that it meets the requirements for conditional immunity.

To be granted a marker, an applicant must provide the NZCC with sufficient information, to the best of its knowledge and belief, on the following:12

  1. the nature of the cartel conduct, such as the products or services involved, the likely duration and the geographic scope;
  2. the main participants; and
  3. the impact of the cartel conduct on a market in New Zealand.

Once an applicant has gathered enough information to 'perfect' the marker, it must provide a written or oral statement to the NZCC that describes the cartel and evidence in support of the cartel's existence. This is called a 'proffer'. The standard time frame allowed to present a proffer to perfect the marker is 40 calendar days, although the NZCC has discretion to extend this time frame. The NZCC will send the marker holder a letter detailing the types of information the NZCC requires to perfect the marker (the marker letter).

Conditional immunity does not automatically follow the provision of the proffer. The NZCC may decide that an applicant has failed to provide the necessary information. In those circumstances, the immunity application will be declined, and the next applicant in the queue will be given the opportunity to apply for immunity. The next applicant will be assessed on the same criteria as the first applicant, and conditional immunity will only be available if the NZCC does not yet have sufficient evidence to bring proceedings.

Once a marker is perfected, conditional immunity is granted, and the applicant must enter into a conditional immunity agreement with the NZCC. The agreement details the ongoing cooperation obligations for the conditional immunity holder. The NZCC does not intend significant departures from the form of the Template Agreement provided in Attachment A of the Cartel Leniency Policy and Guidelines.13

iii Duties of cooperation required for a grant of leniency

Immunity requires a cartel member to continue to provide information to, and to cooperate with, the NZCC throughout any investigation and court proceedings. Full and ongoing cooperation is one of the six conditions required to qualify for conditional immunity. Following perfection of a marker by the applicant, all persons with conditional immunity will receive a letter confirming their obligations and will be asked to confirm they have understood and accepted the obligations.14

The requisite cooperation includes the following:

  1. providing the NZCC with all relevant documents and information;
  2. preserving records and computer-based information; and
  3. encouraging and requiring present and former staff and officers to attend interviews with the NZCC.

The NZCC may initiate proceedings against a person who fails to meet the ongoing cooperation requirements.

iv Reductions in liability

Conditional immunity is only available to the first applicant to approach the NZCC that meets the requisite conditions. The benefits of being first in are significant: the conditional immunity holder will not be subject to NZCC-initiated court proceedings (as long as there is full and ongoing cooperation with the NZCC); however, conditional immunity does not protect the applicant from third-party enforcement action by litigants in New Zealand or other jurisdictions.

Either a company or an individual may apply for conditional immunity. There is no separate leniency system for individuals. Where a company successfully applies for conditional immunity, the NZCC usually extends the immunity (with the same conditions) to any current or former director, officer or employee of that company under 'derivative conditional immunity'. Criminal offences such as obstruction (lying, destroying documents, etc.) are not covered by the immunity.

A corporate applicant for conditional immunity must provide the NZCC with the names of all current and former directors, officers and employees of the company that it considers should be covered by the immunity. Those individuals must then sign an acceptance document acknowledging that they have:

  1. considered their legal position and either sought advice or decided to represent themselves;
  2. read and understood the guidance document for individuals;
  3. read and understood the agreement with their company or former company; and
  4. read and understood the NZCC's Leniency Policy.

The NZCC has emphasised that while it can recommend lower penalties to the court, the court is the decision-maker. As a result, the 25 to 50 per cent discounts previously accepted by the courts cannot be relied upon by applicants in a specific case.15

v Representing a corporate entity and its employees facing liability

There may be circumstances in which the interests of a company with conditional immunity and those of its directors, employees or officers diverge. As with any situation where parties' interests do not align, careful consideration of appropriate representation is required. In those circumstances, the NZCC recommends that the individuals concerned consider obtaining separate legal representation.

Where an individual fails to cooperate with the NZCC's investigation or has coerced others into participating in the cartel, the NZCC can exclude an individual from company-based immunity or revoke their individual immunity.

vi Discovery of surrendered materials by private litigants

A risk for immunity applicants is that any information disclosed to the NZCC may become discoverable in third-party private enforcement actions. While non-party discovery is available as a process in New Zealand, it has not, to date, been successfully used to obtain access to primary documents or leniency materials held by the NZCC.

An applicant for conditional immunity, whether successful or not, cannot withhold documents from discovery in private damages proceedings solely on the basis that they were provided to the NZCC for the purposes of an immunity application. The standard rules for discovery will apply.

Pre-action discovery is available to a prospective plaintiff that is, or may be, entitled to claim relief against another party, but it is impossible or impractical for it to formulate the claim without reference to one or more documents or a group of documents or if there are grounds to believe that any person (who may or may not be the intended defendant) may be, or may have been, in control of those documents.

It is likely that an immunity applicant would be obliged to discover the contemporaneous (non-privileged) documents relating to the alleged cartel conduct, but there would be a basis for asserting privilege or public interest immunity grounds to resist the production of leniency proffers and similar information provided to the NZCC.

These issues were discussed in Schenker AG v. Commerce Commission,16 which dealt with the long-running Air Cargo litigation. In that case, the Court of Appeal upheld a decision of the High Court declining a third party access to documents held on the court file. The documents Schenker sought access to included an agreed statement of facts and source documents from the airlines, including details of interviews with the NZCC (which was not information provided to the NZCC by a conditional immunity applicant).

The Court of Appeal did not dismiss the possibility of a non-party request; however, in declining Schenker access to the court file, the Court placed weight on the fact that allowing access would undermine a party's incentive to cooperate with, and provide commercially sensitive information to, the NZCC.

vii Applications by private, foreign litigants for access to material from leniency applicants

The NZCC has noted that if it receives a third-party request for disclosure of information (including a request for discovery in any court), it will, to the extent reasonably possible, give the marker or conditional immunity holder an opportunity to make submissions to it regarding the proposed release of the information and to take such action as the marker or conditional immunity holder considers necessary to resist the request.17


i Statutory basis for and types of liability

The criminal cartel regime runs in parallel with the current civil regime. The maximum fines are the same as the civil penalties, but the criminal offence must be proven to the higher criminal standard of proof (beyond reasonable doubt) and requires proof of intent; however, this mens rea requirement does not require the offender to know that the effect of its action is illegal or that it undertook its actions with dishonest or fraudulent intent. Inadvertent behaviour does not give rise to criminal liability but can still fall foul of the civil prohibitions.

ii Potential and typical penalties for cartel violations

The maximum civil pecuniary penalties (per breach) currently available for cartel conduct under the Commerce Act are:

  1. for an individual, NZ$500,000; and
  2. for a company, the greater of NZ$10 million or three times the commercial gain derived from the anticompetitive activity (or 10 per cent of group turnover in New Zealand if the amount of the gain cannot be determined).

An individual convicted for intentionally engaging in cartel conduct in breach of the Commerce Act will face a penalty of imprisonment for up to seven years or a criminal fine of up to NZ$500,000, or both (the same as the current maximum civil pecuniary penalty for an individual under the civil enforcement regime). For organisations, the potential fine is up to NZ$10 million, three times the commercial gain from the illegal activity, or up to 10 per cent of the turnover of the organisation involved, whichever is greater.

The courts must impose penalties on individuals unless there are good reasons not to. Companies cannot indemnify individuals for those penalties or reimburse their legal costs if they are found to have breached the cartel prohibition and a penalty is ordered. Courts can order persons who have engaged in cartel conduct to be excluded from company management for up to five years.

It is difficult to provide a typical penalty. To give some idea of recent penalties for cartel conduct:

  1. In September 2020, Lodge Real Estate Limited was ordered by the High Court to pay a penalty of NZ$2.1 million and Monarch Real Estate Limited was ordered by the High Court to pay a penalty of NZ$1.9 million for their involvement in an arrangement with a number of other real estate agencies to pass on the costs of Trade Me's pricing change for real estate listings to vendors. The NZCC said that the case illustrates how important it is that companies avoid any discussions with their competitors on how they could or should respond to price increases from suppliers.
  2. In 2012, following a complaint from a farmer, the NZCC commenced an investigation into a national livestock cartel, arising from the industry's response to the introduction of the National Animal Identification and Tracing Act 2012. This resulted in total court-imposed penalties of NZ$3.28 million.
  3. The highest penalty against a company for cartel conduct to date has been the NZ$7.5 million agreed by Air New Zealand and approved by the court for its part in the Air Cargo cartel. The penalty included a 20 per cent discount for Air New Zealand's admissions. The total penalties ordered in the litigation were NZ$42.5 million.
  4. The highest penalty against an individual to date was NZ$100,000 for price-fixing and exclusionary conduct imposed on Mark Greenacre, the general manager of a supplier that participated in the Wood Preservative Chemicals cartel.

Although the first criminal cartel prosecution has yet to be made, it is only a matter of time before the Commerce Commission elects for criminal charges over civil ones for blatant cartel misconduct. The Commerce Commission has indicated that criminal cartel prosecutions are likely to be reserved for the most egregious breaches of the law.

iii Factors considered in adjusting fines and sentences upward or downward

Section 80 of the Commerce Act provides that in determining an appropriate penalty, the court must have regard to all relevant matters and, in particular, the nature and extent of any commercial gain.

iv Early resolution and settlement procedures

A party to a cartel must be the first party to approach the NZCC to obtain conditional immunity; however, in circumstances where a party is not first in, the NZCC often negotiates settlements with parties who have cooperated with the NZCC's investigation, subject to court approval. The NZCC has not issued any guidelines on how it quantifies the penalties it recommends to the court.

'Day one' response

i Powers of the NZCC to demand information

Under Section 98 of the Commerce Act, the NZCC has extensive powers to require any person to appear before it to give evidence and to provide any information or documents where it considers it 'necessary or desirable' for the purposes of carrying out its functions and exercising its powers under the Act.

The NZCC also has the power to obtain a search warrant to search local premises to determine whether the Commerce Act has been breached. These powers can also be used to obtain information for an overseas regulator with which the NZCC has a cooperation arrangement. However, the use of search warrants has not been common: the NZCC has preferred to rely on its statutory information-gathering powers.

ii Risks of failing to respond to an NZCC information request

Failure by an applicant for immunity to meet the ongoing cooperation requirements of conditional immunity, including the provision of information, may result in the NZCC initiating proceedings against that person.

The failure to respond to a notice requiring the provision of information or documents, or to appear before the NZCC, issued under the Commerce Act is a criminal offence. It is also a criminal offence to:

  1. knowingly provide the NZCC with false or misleading documents, information or evidence;
  2. in the context of a compulsory interview with the NZCC, refuse to take an oath or affirmation, answer any question or produce any document; or
  3. resist, obstruct or delay an NZCC employee from acting pursuant to a search warrant.18

A person who commits any of the above offences is liable on conviction to, in the case of an individual, a fine of up to $100,000 and, in the case of a body corporate, a fine of up to $300,000.19

Private enforcement

i Private rights of action

Any person who has suffered loss or damage caused by a breach of the competition provisions of the Commerce Act may bring a claim for damages against a party involved in the breach. While exemplary damages can be awarded under Section 82A, we are not aware of exemplary damages having been awarded. A private person can also apply for an injunction.

ii Collective actions

There is currently no codified class action regime in New Zealand. Collective claims via representative actions (brought by a named representative plaintiff or plaintiffs on behalf of, and for the benefit of, others with the 'same interest' in the subject matter of the proceeding) are possible. They have featured in certain securities and consumer litigation, although less in competition litigation to date. Those cases are typically brought on an opt-in basis.

In 2009, a draft Class Actions Bill and implementing amendments to the High Court Rules were presented to the Minister of Justice. The Bill would enable the NZCC to bring proceedings for damages as the lead plaintiff in a class action, even though it has not suffered loss or damage (but would be acting on behalf of a person who might have). While there has been limited progress to date, the Law Commission has recently reactivated its review of class actions and is currently reviewing submissions on the Issues Paper.20

iii Calculation of damages

Damages for breach of the Commerce Act are compensatory in nature, so claims are limited to the loss or damage suffered as a result of the offending conduct.

The level of any pecuniary penalty imposed by the court is not relevant to the assessment of compensatory damages; however, whether a pecuniary penalty has been imposed, and if so the amount of the penalty, is relevant to the question of whether to award exemplary damages.

iv Interplay between NZCC investigations and private litigation

There is no direct relationship between an investigation by the NZCC and private litigation. Where a court has found a breach of the Commerce Act, there is no statutory presumption of loss or damage, nor is there any statutory provision enabling a claimant for damages to rely on a judgment or settlement in a pecuniary penalty case as prima facie evidence of a breach. As a result, plaintiffs in a follow-on case must establish both a breach of the Commerce Act and loss or damage caused to them.

Admission of a breach during a settlement with the NZCC is not necessarily probative evidence of liability. The courts recognise the reality that parties can decide to settle litigation for various reasons, and not all settlements are made with admissions of liability.

v Private litigation funding rules

Third-party funding of competition law claims is permissible under the Commerce Act. While a number of commercial litigation funders are active in New Zealand, we are not aware of any instances of third-party funding of competition law claims.

Current developments

The introduction of the new criminal cartel regime will significantly alter the scope and enforcement of competition law in New Zealand. By introducing criminal sanctions for hardcore cartel conduct, the stakes in the New Zealand business environment have now significantly increased. The NZCC anticipates that the criminalisation of cartel conduct will improve the ease and time frames of detection and investigation of cartels that affect New Zealand.21


1 Jennifer Hambleton and April Payne are senior associates and Anna Percy is a solicitor at MinterEllisonRuddWatts.

2 NZCC, Cartel Leniency Policy and Guidelines (June 2018), p. 2.

3 NZCC, Submission to the Economic Development, Science and Innovation Select Committee, Commerce (Criminalisation of Cartels) Amendment Bill, 6 April 2018.

4 NZCC, 'Working with other agencies'.

5 Commerce Commission press release, 'Commerce Commission sets guidelines for international information requests' (27 November 2013).

6 NZCC, Submission to the Economic Development, Science and Innovation Select Committee, Commerce (Criminalisation of Cartels) Amendment Bill, 6 April 2018, p. 14.

7 NZCC, Cartel Leniency Policy and Guidelines (June 2018), p. 12.

8 NZCC, 'Cartel Leniency FAQ'.

9 There are limited exemptions for certain airline tariff and capacity arrangements and for some international liner shipping service agreements between New Zealand and overseas ports.

10 A participant of a cartel includes anyone who is involved in a cartel, as well as anyone who aids, abets, counsels or procures anyone to participate in a cartel.

11 NZCC, Cartel Leniency Policy and Guidelines (July 2021) at 10.

12 NZCC, Cartel Leniency Policy and Guidelines (July 2021), Paragraph 71.

13 ibid., Paragraph 96.

14 ibid., Paragraph 61.

15 ibid., Paragraph 130.

16 [2013] NZCA 114.

17 NZCC Cartel Leniency Policy and Process Guidelines (July 2021), Paragraph 143.

18 Commerce Act 1986, Section 103.

19 Commerce Act 1986, Section103 (4).

20 Law Commission, 'Class Actions and Litigation Funding' project.

21 NZCC, Submission to the Economic Development, Science and Innovation Select Committee, Commerce (Criminalisation of Cartels) Amendment Bill, 6 April 2018, p. 5.

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