Supreme Court allows appeal in cartel case

Supreme Court of New Zealand building in Wellington. Photo / Mark Mitchell

The Supreme Court of New Zealand has knocked back a Commerce Commission action against an Australian businessman involved in a wood treatment chemicals cartel case.

The cartel operated in New Zealand's wood preservative industry from 1998 to 2002 and was busted. In February 2008, three Nufarm companies, which operated the Fernz Timber Protection brand, were fined a total of $1.9 million for price-fixing and market sharing with competitor Koppers Arch.

New Zealand's highest court has now unanimously allowed an appeal by Andrew Robert Poynter against a commission action, arguing the New Zealand courts had no jurisdiction and Poynter must be dismissed from the proceeding.

Poynter was an executive with the Fernz Timber Protection Group.

The commission lodged proceedings against Poynter and also against Elias Akle and Neil Harris, who were executives of the Osmose group of companies.

Poynter appealed the Court of Appeal ruling to the Supreme Court. Harris did not appeal, and the commission last year discontinued proceedings against Akle.

The High Court in March 2007, and the Court of Appeal in March 2009, previously ruled that the commission could pursue legal proceedings against the three defendants, who were living overseas when the cartel was operating.

The commission alleged Poynter was liable for penalties under New Zealand's Commerce Act because he had managerial responsibility within the Fernz Group of companies. It accepted he did not reside in, or carry out business, in New Zealand.

The commission said in a statement that it had received the judgment from the Supreme Court.

"Today's ruling, which overturns those previous judgments, will be studied by the commission in order to consider the full implications of the judgment," said commission chairman Mark Berry.

Today's judgment said Poynter was alleged to have entered the arrangement or understanding in Australia on behalf of the Fernz Group.

It said that an act of Parliament should not be held to have an extra-territorial effect unless that effect was signalled by express language or by necessarily implication.

The circumstances of the case did not fall within section four of the Commerce Act, which provided for the act's extra-territorial reach.

Mr Poynter could not be regarded as having himself engaged in conduct in New Zealand by reason of some expanded concept of agency, or through the common law principles that applied to extra-territorial conspiracies, the judgment said.

- NZPA