Cartel conduct in the country was criminalised on 8 April 2021. Credit: yingko via Shutterstock.

New Zealand’s Commerce Commission has pressed criminal charges against two construction companies and their two directors for cartel conduct.

This marks the country’s first criminal prosecution for cartel conduct, which was criminalised in the country on 8 April 2021.

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A cartel refers to when two or more businesses agree to avoid competition through practices such as price fixing, market allocation, or restricting the output of goods and services.

The charges stem from a commission investigation into allegations of bid rigging for construction contracts for infrastructure projects in Auckland.

Commerce Commission chair John Small stated that the initiation of criminal proceedings in the Auckland District Court underscores the commission’s stance against cartel conduct and its readiness to press criminal charges to uphold the law.

Small said: “Cartel conduct harms consumers through higher prices or reduced quality, and it harms other businesses that are trying to compete fairly. The criminalisation of cartel conduct in 2021 underlines just how serious and harmful this offending is.

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“Bid rigging of publicly funded construction contracts loads extra costs onto taxpayers and the New Zealand economy as conduct of this type undermines fair competition.”

As the case is defined as a criminal matter by the court, the commission stated that it will refrain from offering additional comments on the matter at this, with the defendants’ names not being disclosed yet.

According to the Cartel Leniency Policy and Guidelines, the two companies, if convicted, could attract a fine of $10m.

The fine also includes three times the commercial gain from the conduct, or 10% of the turnover for the company and its interconnected corporate bodies in each relevant accounting period.

Meanwhile, each of the directors may attract a personal fine of a maximum of $500,000 or at most seven years of imprisonment.