Cartels discussion document released

A discussion document that proposes options for the criminalisation of cartels was released for public consultation today.

"Cartel activities such as price fixing and bid rigging are the most harmful form of anti-competitive business conduct," Commerce Minister Simon Power said.

"Such activities cause significant harm by reducing economic output, undermining trust in markets, slowing productivity growth, and distorting investment signals by making cartels appear more profitable than they would be in an undistorted market.

"Businesses suffer and so do consumers, who have to pay inflated prices. And ultimately the wider economy also suffers.

"Introducing criminal penalties, including imprisonment, could be a strong deterrent to organisations contemplating hard-core cartel behaviour.

"Many cartels are so big that the current fines are seen as a cost of doing business, rather than a deterrent, so I believe it's time to look at further measures to deter potential cartels.

"Several countries, including the United States, the United Kingdom, Canada, and Australia, have criminalised cartel behaviour and it's important New Zealand keeps in step with those countries - especially Australia.

"New Zealand is committed to ensuring that businesses operating in both the Australian and New Zealand markets are faced with the same consequences for the same anti-competitive conduct.

"The discussion document canvasses the arguments for and against criminalisation and considers how we could do this. I'm keen to hear what the public think."

The discussion document is available at www.med.govt.nz and submissions close on 31 March 2010.