Settlement reached in equine air freight price-fixing proceeding
Published29 Jul 2020
A settlement has been reached with the International Racehorse Transport New Zealand Partnership (IRT Partnership) in a price fixing case arising from an arrangement between IRT Partnership and its competitor for the provision of domestic and trans-Tasman equine airfreight services.
The Commission filed proceedings seeking a pecuniary penalty against IRT Partnership in October 2019. However, it became clear that the impact of COVID-19 on IRT Partnership’s business meant that it would not be able to pay any such penalty.
The Commission and IRT Partnership agreed to seek declarations from the Court that IRT Partnership breached the provisions of the Commerce Act.
The proceedings concerned a long-standing joint venture arrangement between IRT Partnership and its competitor for the provision of domestic and trans-Tasman equine airfreight services. The joint venture arrangements offered benefits over time including the pooling of skills and resources for logistics. However, the arrangements also included a profit-sharing mechanism that controlled the prices charged to customers for equine airfreight services from October 2009. Those arrangements remained in place until October 2018.
Today, the High Court released its judgment granting the declarations sought by the Commission, recording that IRT Partnership’s conduct breached the Act.
“Collaboration between competitors can be pro-competitive including by supporting more efficient delivery of goods and services to the benefit of consumers,” Commission Deputy Chair, Sue Begg said.
“However, that collaboration should not include unnecessary cartel provisions or extend to areas where the parties should continue to compete independently. In this case, it was not necessary for the joint venture to control the prices offered to customers.
“This case demonstrates the importance of parties regularly reviewing any arrangements they have with competitors to ensure they comply with the Commerce Act. The Commission has published Guidelines to help businesses understand the prohibitions on cartel conduct and rules around collaboration between competitors under the Commerce Act”, said Ms Begg.
IRT Partnership cooperated with the Commission by acknowledging and admitting its conduct breached the prohibition on price fixing in the Commerce Act.
IRT Partnership is a firm trading in partnership, of which the current partners are Auckland-based International Racehorse Transport (NZ) Limited and Cole IRT Limited. IRT Partnership is one of the largest equine freighters in New Zealand with a significant market share.
IRT Partnership’s services involve all facets of the logistical arrangements for the movement of horses by air, from origin to destination. This includes booking charter or scheduled flights, providing for horse welfare on planes, organising vet checks and assisting with tax payments, customs charges and any other requirements of destination countries.
The Commission has produced guidelines explaining the prohibitions on cartel conduct and how competitors can lawfully collaborate under the Commerce Act.