In a settlement with the Commerce Commission, the New Zealand Honey Packers Association (NZHPA) has acknowledged that its discussions and reporting on honey prices were likely to have the effect of price fixing and breach the Commerce Act.
Commission Chair John Belgrave said that the NZHPA organised conference calls during which its members would state their prices for buying and selling honey. Honey packers buy raw honey from beekeepers, package it and sell it to supermarket chains and other retailers.
In the settlement, the NZHPA has given signed undertakings that:
it acknowledges that it is likely to have breached the Act
it will stop asking its members to provide information about their prices
it will write to all its members to advise them that they should not discuss their prices amongst themselves, and
if it does not honour the settlement the Commission can take further action.
The settlement does not prevent honey packers discussing industry issues such as preventing the spread of the varroa mite, climate forecasts and crop predictions. It applies specifically to prices.
In normal circumstances, a honey packer would negotiate a price with a honey producer or a retailer. If they could not agree on a price, then the honey producer would look to sell its honey to another packer, and the retailer would look to buy its honey from another packer. Shopping around and negotiation is how a competitive market works.
However, if packers knew each others' prices they would be able to restrict, or even prevent, competition, and both consumers and producers could suffer.
By knowing each other's prices, packers could force retailers to pay higher prices because a retailer would not be able to negotiate a better price with another packer. Similarly, if packers knew what they would each pay to buy raw honey, then they could force beekeepers to accept lower prices.
In this case, the alleged price fixing arrangement appears to have had little effect because some packers would not provide their prices and others deliberately gave false prices.
Mr Belgrave said that the NZHPA fully co-operated with the Commission during its investigation and in reaching a settlement.
Background
Courts can impose penalties of up to $5 million on an organisation and $500,000 on an individual that breaches the Commerce Act.
The Act prohibits price fixing, which is collusion among competitors over any part of a price (section 27 via 30). It prohibits formal and informal agreements among competitors about discounts, commissions, mark-ups, wholesale prices, retail prices and all other parts of a price.
Media contact
Commerce Act Manager: Geoff Thorn, Phone work (04) 498 0958
Communications Officer: Vincent Cholewa, Phone work (04) 498 0920
