Jail good idea for cartels, says Key

Lock 'em up. Jail time for those who operate price-fixing cartels is an idea worth considering, says Prime Minister John Key. Photo / Hawkes Bay Today

Jail time for those who operate price-fixing cartels is an idea worth considering, Prime Minister John Key said yesterday.

Mr Key and many of his senior colleagues are meeting their counterparts from Australia this week and on the agenda is harmonisation of many commercial laws.

Laws covering cartels are one area where the two countries differ, with many considering New Zealand operates a more lenient regime.

Cartels, often operating informally and in secret, collude on tendering, fix prices, exclude competitors, rig bids and agree to share markets.

They are investigated by the Commerce Commission and large fines can be handed out, but unlike in some countries it is not a criminal offence that can be punished with imprisonment.

Mr Key said criminalising cartel behaviour was a legitimate issue for New Zealand to consider as it was one of the areas where the Commerce Commission and its Australian counterpart the ACCC differed in their operation.

He had seen no advice, but he agreed with a suggestion that New Zealand might not wish to be seen as a soft touch.

"There are a number of different factors to consider, but certainly differences between the ACCC and the New Zealand Commerce Commission are something I know the Commerce Minister [Simon Power] is considering," Mr Key said.

Mr Power recently told a parliamentary select committee that he was looking into the possibility of jail sentences for those operating cartels.

Select committee chairwoman Lianne Dalziel said at the time that fines did not seem to be a deterrent.

"They don't mind paying the fines, but they do mind going to jail," Ms Dalziel said.

When she wondered whether Mr Power was considering criminalising cartel behaviour, he paused for a long time before saying it was on his work programme. After the meeting Mr Power was reluctant to talk about the issue, saying it was a "notion" at this stage.

The commission is accusing Air New Zealand of operating with other airlines as a cartel to raise the price of freighting cargo by imposing fuel and security surcharges for more than seven years. Air NZ denies the charge.

There have been appeals following the successful prosecution of a number of companies for running a wood chemical cartel.

The penalty for colluding over price and business deals can be high - up to $500,000 for an individual or more than $10 million for a company.

The commission has been using a leniency policy, which means that if one member of a cartel gives evidence and co-operates with the prosecution it will not be treated as harshly as its fellow cartel members.

- NZPA