What is a cartel?
Cartels deprive consumers and other businesses of a fair deal. A cartel is where two or more businesses agree not to compete with each other in order to make greater profits. This conduct can take many forms, including price fixing, dividing up markets, rigging bids or restricting output of goods and services.
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Types of cartel conduct
Practical tips for businesses when engaging with competitors
- Make sure that you and your staff are familiar with the requirements of the Commerce Act. Keep records of who has attended training.
- Think carefully about who you are, or may be, in competition with, especially if sub-contracting is involved.
- Do not agree prices, discounts or any matters relating to price with your competitors (unless it is a specific sub-contract you are discussing).
- Do not agree to restrict output in any way, or to allocate customers or geographic markets between competitors.
- Do not exchange pricing, how much you plan to produce in the future, customer information or which markets you sell into with your competitors.
- If you are approached by another business to discuss pricing, allocating customers, bids for contracts or restricting outputs you should raise an objection straight away. Leave the discussion immediately.
- Review internal documents, policies and procedures for compliance with the Commerce Act and seek independent legal advice.
- If you become aware of anti-competitive conduct, contact the Commerce Commission straight away.
Taking action against cartelsRead more about reporting cartel conduct
Exceptions under the Commerce Act
- collaborative activities (section 31)
- vertical supply contracts (section 32)
- joint buying and promotion agreements (section 33).
Competitor Collaboration Guidelines
- the cartel prohibition (with exceptions for collaborative activities, vertical supply contracts and joint buying agreements)
- the clearance regime for businesses that are proposing to enter into collaborative activities which risk breaching the law.