Successful year for Commerce Commission: highest penalties yet, more proactive, new responsibilities
Published12 Nov 1999
The Commerce Commission's Annual Report details a successful year for the Commission it won record penalties, undertook more pro-active work, and carried out new responsibilities.
Commission Chairman John Belgrave, who was appointed in the current financial year, said the Annual Report is a credit to the Commissioners and staff: "I was not on the Commission during the period reported on but I am delighted to have been given such a strong foundation to build on.
"For a market economy like New Zealand's to be successful, there must be effective policies, legislation and enforcement to prevent anti-competitive conduct and to promote fair trading.
"The Commission's role is enforcement of competition laws. Its educative and enforcement actions against abuse of market powers, collusion, anti-competitive mergers, and misleading and deceptive conduct make an important contribution to the economic welfare of New Zealanders."
Highlights of the Commission's activities in 1998/99 include:
- The highest total and individual penalties to date under the Commerce Act $5.5 million against a group of North Island meat companies that colluded over prices, including $1.5 million against each of Affco New Zealand Limited, Richmond Limited and Lowe Walker NZ Limited for their involvement in that collusion.
- Eli Lilly & Company (NZ) Limited's animal health remedies business, which trades as Elanco, and Chemstock Animal Health Limited paid total penalties of $700,000 for price fixing.
- The highest compensation order the District Court can make, $200,000, and the highest Fair Trading Act fine that can be imposed on a individual, $30,000, were imposed on Lisa Morton for promoting the Joker 88 and Liberty Group bonds pyramid schemes.
- The High Court rejected an appeal by Ashley Guy Rhodes and his companies and upheld the highest Fair Trading Act fine to date, $130,000. Mr Rhodes and his companies had been convicted of breaching the Act by issuing false invoices for advertising.
- The Commission's investigation and enforcement criteria were revised, leading to a greater emphasis on more complex investigations or more significant breaches.
- Considerable pro-active work was done by working with major traders, trade associations, local authorities, organisations in the health industry and visiting business people in areas where there is no Commission office, and through surveillance of business acquisitions and advertising.
- The Commission made 37 adjudication decisions (on average, one every six or seven working days) about clearances and authorisations under the Commerce Act and exemptions from the Electricity Industry Reform Act. Five applications were made for authorisations, which required extensive investigation and economic and legal assessment.
- The Electricity Industry Reform Act gave the Commission additional enforcement and adjudication roles. Adjudication in particular led to a substantial increase in the Commission's work.
- The Commission carried out extensive background enquiries and research for a study of possible price controls at Auckland, Wellington and Christchurch International Airports. This was the first time since the Commerce Act was passed in 1986 that the Commission had been required to carry out a price control study.
Copies of the Commission's Annual Report are available from reception at its Wellington office, level 7 Landcorp House, 101 Lambton Quay.
