The Commerce Commission has reached administrative settlements with two Trade Me sellers who admitted that they had been fixing prices for tyres, which is illegal under the Commerce Act.
The Commerce Commission has reached administrative settlements with two Trade Me sellers who admitted that they had been fixing prices for tyres, which is illegal under the Commerce Act.
The sellers, Tyre Guys Limited trading as tyre_guys and Adens Trading Limited trading as adenstyreshop, contacted each other via comments on Trade Me pages, text messages and emails. Between 12 and 27 January 2010, the owner of Tyre Guys Limited sent his prices via email for six tyre brands to Adens Trading Limited, who then matched those prices for three of the brands. Both traders made sales at the fixed prices.
Tyre Guys Limited's owner also admits contacting Adens Trading Limited in July and August 2009 and attempting to fix prices by suggesting that they both increase their prices according to a specific pricing formula, however, this suggestion was not acted on at that time.
Adens Trading Limited's owner became aware that this behaviour might breach the Commerce Act when the Commission issued a warning in February 2010 to another Trade Me seller who, in the Commission's view, attempted to fix prices for LED bicycle lights.
"Although the price fixing only took place for a short time and the sellers offered competitive prices before and after the collusive period, consumers were likely to pay more than they otherwise would have," said Ritchie Hutton, Commerce Commission Acting General Manager, Enforcement.
"When behaviour like this is found the Commission will take appropriate action. Online sellers should decide on the reserve price and the 'buy now' price themselves, and not try to agree prices with competitors. Any attempt to lessen competition through price fixing will be viewed seriously, no matter what the forum, as price fixing agreements are harmful to consumers who may end up paying more," said Mr Hutton.
Both parties admitted their behaviour, stopped it and have agreed to undertake training at their own expense, so that they know and understand the requirements of the Commerce Act. The Commerce Commission's decision to settle with the parties took into account that both traders fully cooperated with the Commission. The Commission appreciated Trade Me's assistance with this matter.
The Commerce Act. Section 30 of the Commerce Act prohibits provisions of contracts, arrangements or understandings that have the purpose, effect, or likely effect, of fixing, controlling or maintaining the price of goods or services supplied or acquired by parties. It deems such behaviour to substantially lessen competition in a market and to be in breach of the Commerce Act 1986. The views of the Commission do not constitute a ruling of law. Only the courts can decide if the Commerce Act has been breached and set appropriate penalties.
Enforcement options open to the Commerce Commission. The Commerce Commission uses a range of enforcement tools to resolve issues under the Commerce Act ranging from warnings and settlements through to litigation. It makes a judgement based on issues such as extent of detriment, seriousness of the conduct, and public interest in deciding the most appropriate resolution. A settlement can resolve a potential breach of the Act in a more timely and cost-effective way than a prosecution, resulting not only in deterring the behaviour but also in education of the trader(s) involved and the wider business community about the Commerce Act.
