The more than $5.5 million total penalties imposed by the Auckland High Court on nine meat companies today is a strong warning to all industries - Commerce Act penalties are increasing rapidly and breaches can be expensive.

"The Act applies to all industries in the country and this decision shows that Courts will not tolerate anti-competitive behaviour and can punish it severely," Commerce Commission General Manager John Feil said.

Mr Feil said that the Commission's role is to bring about compliance with the Act. Where that is best achieved through court action, then the Commission will take the necessary action and continue with it until a result is achieved.

This case involved an extensive investigation into one of the biggest industries in the country and a court battle fought for three years before the companies today admitted they had breached the Act and the Court imposed penalties.

In October 1995 the Commission alleged that, through a series of more than 90 regular meetings, 12 North Island meat companies entered into anti-competitive arrangements that related to the prices they would pay farmers for livestock. (Breaches of section 27 Act.)

In its submissions to the Court the Commission highlighted that the understandings not only included the incumbent giants, Affco and Richmond, but also new entrants who would otherwise have been expected to ensure competitive prices.

Justice Smellie said: "These proceedings are in effect, the first large scale challenge by the Commerce Commission to breaches of the Act. The penalties imposed must send a clear message to those who might be tempted to contravene the provisions of the Act. In short, the penalties must both deter and condemn."

Penalties

This case has increased the highest total penalty to date under the Act by more than 11 times, from $500,000 against Port Nelson Limited (PNL) for three breaches to $5.51 million. It increases the highest individual penalty five times, from $300,000 against PNL to $1.5 million.

Maximum penalties Courts can impose under the Act are $5 million against an organisation and $500,000 against an individual. Courts can also impose a wide range of orders and injunctions.

The companies against whom the Commission took court action are:

Affco New Zealand Ltd $1.5 million

Richmond Ltd $1.5 million

Lowe Walker NZ Ltd $1.5 million

Pacific Beef Ltd $375,000

Taylor Preston Ltd/C R Grace Ltd (together) $250,000

Waitotara Meat Co Ltd $225,000

Greenlea Premier Meats Ltd $90,000

Wallford Meat Limited $70,000

Te Kuiti Meat Processors Ltd court action continuing

Waikato Beef Packers Ltd in receivership

Benmore in receivership

Media contact: General Manager John Feil

Today 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