1998 saw courts imposing record penalties under both Commerce and Fair Trading Acts, the Commerce Commission in the Privy Council for the first time and a third Act for the Commission to enforce.

"This has been a year of important developments in New Zealand's competition law," Commission Chairman Peter Allport said, "probably more so than in any other year since the Commerce and Fair Trading Acts were passed in 1986."

The highest total penalty under the Commerce Act increased more than elevenfold this year when the Auckland High Court ordered a group of North Island meat companies to pay more than $5.5 million. Previously the highest total penalty had been $500,000 imposed on Port Nelson Limited (PNL) in 1995 for three breaches of the Act.

The meat companies admitted that, through a series of more than 90 regular meetings, they had entered into anti-competitive arrangements relating to the prices they would pay farmers for livestock.

The highest individual penalty increased fivefold to $1.5 million imposed on each of Affco New Zealand Limited, Richmond Limited and Lowe Walker NZ Limited for their involvement in the North Island meat companies case. Previously it had been $300,000 imposed on PNL for one of its three breaches.

This year, for the first time, a Commission case involved a decision from the Privy Council. The Privy Council's decision meant that Auckland Toyota dealer, Giltrap City Toyota, paid costs to the Commission and will face trial in the Auckland High Court next year to hear allegations that it was involved in a price fixing arrangement.

Seven other Toyota dealers had previously admitted their involvement and the High Court had imposed penalties of $50,000 on each.

Under the Fair Trading Act both record fines and record compensation orders were imposed.

The Auckland District Court fined Ashley Guy Rhodes and his four companies, Zennith Publishing Limited, Debson Holdings Limited, Summit Publications Limited and Pana Publications Limited, a total of $130,000 for issuing false invoices for advertising.

Mr Rhodes and his companies appealed on numerous grounds relating to the Commission's investigation, the trial, the convictions and the sentence. The High Court rejected the appeal on all grounds.

Previously the highest total fine had been $67,500 imposed earlier this year on two linked companies, Colrayne Holdings Limited and Spencer York Publishing Limited, also for issuing false invoices for advertising. Prior to this year the highest fine had been $63,000 imposed on Bond & Bond.

The Christchurch District Court ordered Brian Joseph Direen to pay $196,375 dollars compensation to seven people who had been misled into investing in his fast food franchises. The Christchurch High Court rejected Mr Direen's appeal that compensation orders could not be imposed after a criminal trial. He has now appealed to the Court of Appeal.

Earlier in the year the Auckland District Court had ordered David Higgs and Higgs Holdings Limited to pay $137,000 compensation to 13 people who had invested in a biscuit selling franchise.

"There has been a steady flow of decisions from the courts that have developed the country's competition law, not just in terms of much higher penalties, but also in terms of how and when it applies," Mr Allport said.

"That will continue next year as there has also been a steady flow of new cases going to trial."

However, the biggest development in competition law came not from the courts, but from Parliament. The Electricity Industry Reform Act 1998 (EIR Act) was passed in July.

The EIR Act has made radical changes to the electricity industry by forcing the separation of lines businesses from generation and retailing businesses. The Commission has been given the additional roles of enforcing the EIR Act, deciding on applications for exemptions from it and deciding on extensions to it.

"Our objective has been to bring about compliance with the Commerce and Fair Trading Acts," Mr Allport said. "A mixture of education and enforcement has shown itself to be the best way of achieving this. We now add the EIR Act, and intend to apply the same approach. Where education does not work enforcement action will be taken."

Statistical summary for 1998

Court actions: 15 cases filed; 24 decisions from courts.

Settlements accepted: 65

Warnings issued: 211

Media contact: General Manager John Feil

Cellphone 021 473 141

Communications Officer Vincent Cholewa

Phone work (04) 498 0920

Commission media releases can be viewed on its web site www.comcom.govt.nz