Court of Appeal upholds High Court decision and $500,000 penalties against Port Nelson Ltd
Published03 Jul 1996
The Commerce Commission's approach to use of market dominance by monopolies has been strongly endorsed today by the Court of Appeal.
The Court rejected an appeal by Port Nelson Ltd (PNL) against a High Court decision and penalties totalling $500,000.
"I am pleased with the Court of Appeal's decision," said Commission Chairman Dr Alan Bollard.
"The Court has clarified how to interpret dominance in markets. This is a complex legal issue of key importance to all businesses owning, or trying to compete with, natural monopolies."
Natural monopolies are facilities that cannot economically be duplicated. Examples include ports, gas pipelines, and electricity and telecommunications networks.
"The real value of this decision is that it gives the Commission a powerful tool to use if a dominant company tries to prevent a new competitor entering the market or if it tries to eliminate an existing competitor.
"The Court of Appeal's decision endorses the way the Commission deals with companies who may be using a dominant position for an anti-competitive purpose. It also gives companies a clear understanding of how they should behave to ensure they stay within the law.
"It is significant that the Court of Appeal has specifically said that $500,000 is not an excessive or inappropriate penalty, and that it cannot be considered severe in light of PNL's actions and the $5 million maximum.
"The decision and the Court of Appeal's comments set a baseline. There is a clear warning - future breaches of the Commerce Act may well attract considerably higher penalties."
Dr Bollard said the written decision gives thorough detailed explanations of how the Court of Appeal viewed the matters, and is an important document for all businesses involved with natural monopolies or other dominance issues.
The Commission case against PNL was heard in the Nelson High Court last year. It alleged PNL used its dominant position to prevent Tasman Bay Marine Pilots Ltd competing with it. It also alleged that PNL had twice entered into contracts that had anti-competitive purposes.
The High Court found PNL had breached the Act in all three matters and imposed penalties totalling $500,000. PNL appealed this decision.
The Court of Appeal dismissed the appeal and ordered $25,000 costs be paid to the Commission.
Media contact: Communications Officer Vincent Cholewa
Phone work (04) 498 0920, home (04) 479 1432
Note: The Commerce Act does not prohibit a company being in a dominant position in a market. However, it does prohibit that position being used to:
