The Commerce Commission has concluded an investigation into anti-competitive conduct in the elevator industry, reaching a settlement with one company.

The settlement is with ThyssenKrupp Elevator New Zealand Limited (ThyssenKrupp), which has admitted an attempted breach of the Commerce Act by contacting a competitor and attempting to ensure that the prices submitted for a maintenance tender were 'similar'.

Both ThyssenKrupp and one of its former contractors admitted contacting a competitor's employee by telephone and discussing the pricing and other details of an upcoming contract for which both parties had been asked to submit a quote. During this telephone call, the ThyssenKrupp contractor suggested that the prices to be submitted by the parties be 'similar', and also requested that the competitor inform the ThyssenKrupp contractor of the price prior to its submission.

"This behaviour amounted to an attempt at price fixing which is prohibited under the Commerce Act. Price fixing is harmful both to consumers and businesses. Such agreements push up prices at the expense of consumers, and also of other businesses," said Commerce Commission Director of Competition Deborah Battell. Ms Battell said that a settlement was the appropriate way to resolve the issue. "The Commission would not normally settle with parties when price fixing attempts are involved. In this instance, however, the attempt appeared to be an isolated incident on the part of one contractor and not part of a more long-standing cartel arrangement."

Under the terms of the settlement the Commission required ThyssenKrupp to admit the conduct and provide details of its Commerce Act compliance programme. ThyssenKrupp has now implemented a training programme to prevent such behaviour occurring in future.

Background

The purpose of the Commerce Act is to promote competition in markets for the long-term benefit of consumers in New Zealand. To this end, the Act prohibits a range of anti-competitive conduct.

Of relevance in this instance is section 30 of the Act, which prohibits competitors from agreeing to fix prices for goods and services they supply or acquire. Section 27 deems such behaviour to substantially lessen competition.

The price fixing provisions of the Act prohibit a range of collective behaviour among competitors (including pricing formulae, maximum prices and fee schedules).

Price fixing is considered harmful because it interferes in the competitive determination of prices, resulting in potentially higher prices for consumers.

If the Court finds that a person has breached the Act, substantial penalties may be imposed: up to $10 million for companies, and up to $500,000 for individuals.