A failed attempt to rig bids for Transit New Zealand and Gisborne District Council roadmarking contracts cost Roadmarkers Waikato (1981) Limited $20,000 in the Auckland High Court today.

The Commerce Commission alleged that Roadmarkers had breached the Commerce Act by pressuring another contractor to either not bid or to bid at a price specified by Roadmarkers, and asking other contractors if they would be bidding and how competitive their bids would be.

Today in Court Roadmarkers admitted the breach and was ordered to pay a $15,000 penalty and $5,000 costs.

Commission Chairman Peter Allport said that this case has an important message for all businesses.

"In any industry competitors colluding over prices is fundamentally anti-competitive and the Commission will take action against it," Mr Allport said.

"Collusion over prices is an attempt to force buyers to pay more and to deprive them of one of the most significant benefits of competition - lower prices.

"Here the attempt failed, but the Court still imposed penalties and costs totalling more than 20 percent of the value of the contract. Add to that Roadmarkers' own legal costs, bad publicity and management time taken up by the case, then you have a better estimate of what acting anti-competitively to win a $100,000 contract cost."

In April 1995 Transit New Zealand issued tender documents for the roadmarking of state highways in the Gisborne area. Later that year the Gisborne District Council was to issue tender documents for roadmarking district roads administered by the Council.

Roadmarkers' Manager Brent Rouse contacted other contractors and discussed the Transit contract.

Mr Rouse attempted to persuade one of the contractors not to bid for the Transit contract, or to bid at a price that would allow Roadmarkers to win the contract, in return for the contractor being "allowed" to win the Gisborne District Council contract.

Mr Rouse claimed to be able to guarantee that other roadmarking companies would allow the contractor to successfully tender for the District Council contract.

Mr Rouse told the contractor that if it did not agree, then Roadmarkers would bid $80,000, which is close to or below cost, for the Transit contract and would also put in a low bid for the District Council contract.

The contractor refused to be involved in the arrangement and submitted its original bid for the Transit contract. In total five companies bid for this contract, with Roadmarkers making the lowest bid of $99,778.

Media contact: Commerce Act Manager Jo Bransgrove

Phone work (04) 498 0958

Communications Officer Vincent Cholewa

Phone work (04) 498 0920

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