Tuesday, March 5, 2024

Commission files criminal charges against construction companies in historic cartel prosecution 

The Commerce Commission has filed criminal charges against two construction companies and two directors for alleged bid rigging of publicly-funded construction contracts, in the country’s first-ever criminal prosecution for cartel conduct. 

The charges follow a Commission investigation into allegations that the companies and their directors colluded to rig bids for infrastructure projects in Auckland. 

Commerce Commission Chair, John Small says the criminal proceedings filed in the Auckland District Court send a strong message to businesses that the Commission will not tolerate cartel conduct, and is prepared to lay criminal charges to enforce the law. 

“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,” said Chair Small.

“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. The Commission will not hesitate to bring criminal proceedings in appropriate cases to ensure kiwis are getting the benefits of fair prices, quality services and more choice.”

As this is a criminal matter currently before the Court, the Commission will not be providing further comment on the case at this time.

A cartel is where two or more businesses agree not to compete with each other by price fixing, allocating markets or customers, or restricting the output or acquisition of goods and services. Bid rigging is a form of price fixing and can also involve allocating markets or customers.

Cartel conduct is prohibited under section 30 of the Commerce Act. As of 8 April 2021, cartel conduct is punishable with a term of imprisonment of up to 7 years, underlying just how serious and harmful offending of this nature can be. 

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