The Commerce Commission has concluded its investigation into an allegation of price-fixing by the Committee of Gisborne Farmers Market. A settlement has been reached which has resolved the issue without any need for court action, and ensures that prices at the market will be set by the individual stall holders.

The Commission began investigating the behaviour in October 2009, after receiving a complaint from a member of the Gisborne Farmers Market Committee. The complainant advised the Commission that the Committee was attempting to fix the prices for produce sold at the market, by passing a rule which required members to sell their produce above the level of wholesale prices.

The rule came about because some committee members wanted to prevent the complainant from selling produce at a price that they thought was too low.

The Committee member objected to the rule and sought advice from the Commerce Commission, and he then shared this information with the Committee. The Commission advised the complainant that the rule was likely to breach section 27 via section 30 of the Commerce Act.  Despite this, the Committee went ahead, passed the rule and publicised it to their members.

"The Gisborne Farmers Market Committee has agreed with the Commission that this was an attempt to fix, control, or maintain the price of produce, which is illegal under the Commerce Act. The Gisborne Farmers Market Committee has agreed to remove the rule," said Kate Morrison, General Manager Enforcement at the Commerce Commission.

"This case sends a clear message to the public and all types of businesses, that price fixing is not limited to setting a specific price, but can also include setting a price range, or a minimum price level."

"Consumers benefit in a competitive market from better prices, quality and choice. So any attempt by traders, large or small, to fix prices is to the detriment of consumers. Traders are also disadvantaged because they lose the right to decide their own pricing structure," said Ms Morrison.

Background

Gisborne Farmers Market is an incorporated society and a member of Farmers' Markets New Zealand.

Section 27 via section 30 of the Commerce Act prohibits a contract, arrangement or understanding between competitors that has the purpose or effect or likely effect of fixing, controlling or maintaining the price of goods or services. Under section 30 a contract, arrangement or understanding that fixes price is deemed to substantially lessen competition.

Enforcement options open to the Commerce Commission. The Commerce Commission uses a range of enforcement tools to resolve issues under the Commerce Act ranging from warnings and settlements through to litigation. It makes a judgement based on issues such as extent of detriment, seriousness of the conduct, and public interest in deciding the most appropriate resolution. A settlement can resolve a potential breach of the Act in a more timely and cost-effective way than a prosecution, resulting not only in deterring the behaviour but also in education of the trader(s) involved and the wider business community about the Commerce Act.