Commission supports liquor accord, gives warning to help those involved comply with the Commerce Act
Published18 Jan 2000
The Auckland City Downtown Liquor Accord has been amended after a Commerce Commission warning that the original proposal could have put the hotels, cafes, and restaurants that had joined the Accord, at risk of breaching the Commerce Act.
The Auckland City Council, the Police, and others involved in the hospitality industry developed the Accord. The purpose of the Accord was for businesses to jointly "adopt responsible and quality business practices, particularly where the sale and consumption of liquor is involved, in order to create a pleasant and safe community for residents, city workers, customers and visitors alike."
In its original form the Accord included terminology that could have been interpreted to mean that members were not allowed to compete on price or to offer cheaper drinks or "happy hours".
The Commerce Act strictly prohibits agreements between competitors that will fix, control or maintain the prices for goods or services. Businesses must make their own decisions about their own prices. Any agreement that interferes with that process is likely to breach the Act. Courts can impose penalties of up to $5 million on companies, and up to $500,000 on individuals for breaches.
The Commission has contacted all of the Accord members to ensure they are aware of their obligations under the Act.
The Commission's Commerce Act Manager, Geoff Thorn, said: "The Accord has an excellent objective a safer community through better compliance with liquor laws and we want to make sure that any misunderstandings about the Commerce Act do not stop it going ahead.
"It would have been sadly ironic if a community effort to encourage compliance with one law put those involved at risk of breaking another. Our warning will help ensure that the Accord can go ahead in a way that, in our opinion, does not put businesses at risk under the Commerce Act."
Mr Thorn said that it is important to note that the Commission's warning letter is not an authorisation. It does not prevent competitors, consumers or others who might believe that businesses are breaching the Commerce Act from taking their own legal action.
Background
Section 30 of the Commerce Act prohibits competitors making contracts, arrangements or understandings about " the price for goods or services, or any discount, allowance, rebate or credit in relation to goods or services "
In cases taken under this section, courts have imposed penalties including:
A total of $700,000 against Elanco, which is the trading name of Eli Lilly & Company (NZ) Limited, and Chemstock Animal Health Limited. These companies provide wholesale supplies to veterinarians, and they colluded over the prices of cattle growth promotants and medicines.
A total of $400,000 against Christchurch Transport Limited and its Chief Executive for attempting to rig who should bid for and who should win bus route contracts.
A total of $350,000 against seven Auckland Toyota dealers for agreeing to limit the discount available to buyers of new cars. Court action is continuing against an eighth dealer, Giltrap City Toyota. The seven who admitted breaching the Act were: Albany Toyota, North Shore Toyota, North Western Toyota, Greenlane Toyota, Derbyshire Toyota, Manukau City Toyota and Papakura Toyota.
A total of $300,000 against Country Fare Bakeries Limited and Quality Bakers New Zealand Limited for attempting to fix the maximum discounts that they would offer to retailers buying their bread.
