FDBusiness.com

The New Zealand Court of Appeal has given the Commerce Commission the green light to pursue Australian packaging company Visy over a wider range of allegations relating to a multimillion-dollar price-fixing cartel

The decision overturns an earlier High Court one.

The regulator had appealed the April 2011 ruling by High Court’s Justice Paul Heath that reduced the number of claims it could pursue against Visy and its former general manager Rod Carroll, arguing the High Court erred in rejecting a much wider pattern of alleged cartel behaviour in the New Zealand packaging market.

The Commission’s case claims that Visy and its competitor Amcor illegally agreed to divide trans-Tasman corrugated fibreboard packaging markets between them and to fix packaging prices for New Zealand.

The Commission alleged the companies decided in advance which of the two would win customer tenders, and compensated each other when competition on tenders occurred.

Visy and one of its executives, Rod Carroll, have admitted the cartel arrangements but denied they extended to New Zealand.

The High Court ruled in May last year that while the commission was free to pursue claims relating to Fonterra, allegations relating to transactions involving Coca-Cola, Goodman Fielder, Inghams and Huhtamaki fell outside the scope of the Commerce Act.

New Zealand trans-Tasman market

The court had affirmed that  Section 27 of the act covered conduct designed to substantially lessen competition in a relevant market in New Zealand, not a ”New Zealand trans-Tasman market” as the commission has claimed.

But the Court of Appeal said that the act enabled the commission to take enforcement action against a person that engages in conduct offshore, if that person is resident or carrying on business in New Zealand, and their conduct is targeted towards New Zealand.

The commission said that in reaching its decision, the Court of Appeal reiterated that ”cartel conduct has a damaging impact upon society”, and emphasised the role of the act is to prevent harm to New Zealanders from anti-competitive conduct.

The court also upheld the High Court’s findings that the commission could pursue claims against Rod Carroll.

The Federal Court of Australia has already imposed penalties of A$36 million (NZ$46.4m)  against Visy and its owner Richard Pratt, and A$500,000 (NZ$644,000) against Carroll.

Commerce Commission chair Mark Berry said the ruling was an important one.

Berry said: ”We challenged the High Court decision because we felt it set an unrealistically high bar for us to take enforcement action against overseas defendants.

“In particular, the Court clarified that if a defendant is resident in or carrying on business in New Zealand, then its conduct offshore will be covered by the Commerce Act provided that conduct ’relates to’ New Zealand markets.

“This clarification will help us take effective enforcement action against cartel conduct targeting New Zealand.”