Canterbury cleaning company in cartel fined $51,000: Commerce Commission

CI Scrubbing and another industrial cleaning company agreed to only offer industrial scrubbing services, while the other would only offer industrial sweeping services.

A Canterbury cleaning company has been fined $51,000 for engaging in a cartel, the Commerce Commission says.

The High Court at Christchurch imposed the penalty against Canterbury Industrial Scrubbing for longstanding cartel agreements with a competitor, the commission said today.

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.

The scheme ran virtually uninterrupted for nearly two decades.

CI Scrubbing and another industrial cleaning company agreed only to offer industrial scrubbing services, while the other would only offer industrial sweeping services, and the two would not compete.

When the other company tried to exit the scheme, CI Scrubbing director Daniel Jamieson threatened to target its customer base to persuade them to continue.

After the cartel broke down, some industrial scrubbing and sweeping services customers saw an immediate benefit, with prices dropping by up to 30% in some cases.

Justice Rachel Dunningham found the long duration of the scheme was a “clear aggravating factor” and the use of commercial threats amounted to a “serious breach” of the law.

She accepted were it not for the current financial circumstances of the defendants, and cooperation with the commission’s investigation, a penalty of between $750,000 to $1.25m would have been appropriate.

A penalty could have been made against Jaimeson for $50,000 to $70,000.

She imposed a penalty of $51,000 against the company and made declarations against Jamieson.

Commissioner Derek Johnston said targeting cartel conduct remained an enduring priority due to its secretive nature and the harm it could cause consumers.

”We welcome the court’s finding that this conduct was serious and that much higher penalties would have been imposed but for the current financial circumstances of the defendants.”

The case should serve as a strong reminder to businesses and their directors about the law, he said.

“Ignorance of the law is never an excuse. The criminalisation of cartel conduct in 2021 underlines just how serious and harmful this offending is.”

Industrial floor cleaning services are used in commercial and industrial premises to clean areas such as warehouses and carparks.

Industrial sweeping involves using specialised machines to remove the dry waste and dust from floors, which can then be scrubbed by specialised industrial machines.

Industrial scrubbing uses water and chemicals to remove residues, marks, and stains.

Some customers require sweeping and scrubbing to ensure a healthy and safe working environment. Others use one or both services for cosmetic reasons, the commission said.

The commission said cartel conduct harmed consumers by preventing businesses from competing to provide better quality services at better prices, and it harmed other businesses trying to compete fairly.

Anne Gibson has been the Herald’s property editor for 24 years, written books and covered property extensively here and overseas.