The Commerce Commission has reached a settlement with ERS New Zealand Limited (ERS NZ), a waste oil company, following an investigation into an attempt to fix prices, which is illegal under the Commerce Act.
The Commerce Commission has reached a settlement with ERS New Zealand Limited (ERS NZ), a waste oil company, following an investigation into an attempt to fix prices, which is illegal under the Commerce Act.
The Commission investigated after a whistleblower provided a secret tape-recording of a meeting in which a Director of ERS NZ discussed future price increases with a competitor.
In March 2009 the Commission filed proceedings in the High Court in Auckland against ERS NZ and the Director alleging that the conversation was an attempt to fix prices with a competitor. Those proceedings have now been withdrawn. ERS NZ has agreed to pay a significant sum to the Commission towards the costs of the investigation, and has agreed to ensure its directors and senior executives undertake competition law compliance training.
"Price fixing harms the competitive process, potentially resulting in customers paying higher prices. Under the legislation, it doesn't matter whether an attempt to fix prices was successful, the conversation in itself may breach the Commerce Act," said Commerce Commission General Manager of Enforcement, Kate Morrison.
"In this case we have taken into account that the company recognises the imprudence of the alleged price-fixing attempt, has undertaken to improve compliance training, and has made payment towards our investigation costs. The Commission believes this provides satisfactory resolution without the need for court proceedings," said Ms Morrison.
"The whistleblower is to be commended for not agreeing to the price-fixing attempt and approaching the Commission. The Commission's leniency policy gives protection to whistleblowers by granting them immunity from prosecution."
Background
ERS New Zealand Limited is the largest provider of waste oil services in New Zealand. The company is involved in the collection and disposal of waste oil, such as waste lubricant oil used in motor vehicles and fuel which is collected from the slop tanks of ocean going vessels.
The Commerce Act promotes competition in markets for the long-term benefit of consumers in New Zealand. The Act prohibits anticompetitive conduct. Section 30 of the Act prohibits competitors from agreeing or attempting to agree to fix prices for goods and services the supply or acquire. Section 27 deems such behaviour to substantially lessen competition.
Penalties for breaching the Commerce Act can be up to $10 million for companies and up to $500,000 for individuals. Only the Courts can decide if the Act has been breached and impose penalties.
