Commerce Commission chair calls this a historic, precedent-setting case
The Commerce Commission has announced that the High Court in Auckland recently completed New Zealand’s first criminal prosecution for cartel conduct, with the sentencing of a second company that participated in the bid rigging of public roading contracts.
Dr John Small, the Commerce Commission’s chair, called this a historic, precedent-setting case.
“Cartel detection and enforcement are a priority for the Commission, and we are particularly concerned when we see conduct that targets taxpayer-funded projects,” Small said in a news release. “Where we suspect businesses and individuals are cheating the system by committing these crimes, we will take action against the conspirators.”
The Commerce Commission’s news release gave more information about the prosecution.
Munesh Kumar admitted that he instigated the cartel conduct and served as its sole direct beneficiary. Last December, the High Court sentenced him to six months of community detention and 200 hours of community work. It ordered MaxBuild Ltd, his construction company, to pay a $500,000 fine.
The second company involved obtained interim name suppression. In the sentencing ruling, Justice Sally Fitzgerald called cartel conduct through bid rigging inherently deceptive, concealed from the customer, and challenging to detect.
The judge accepted that the second company should have paid the appropriate amount of $595,000, which it could not afford. The judge thus imposed a $30,000 fine, which was the most it could pay.
In deciding the penalty, the judge considered factors such as the second company’s inactive trading status and its negative financial position.
The judge acknowledged that the second company did not benefit directly from the conduct. However, the judge noted that the second company submitted bids to secure future work from the procurer and actively engaged in collusive behaviour that would not have occurred but for it.
The Commerce Commission’s news release provided the context for the sentencing proceeding.
In April 2022, the Commerce Commission commenced investigating the alleged bid rigging of contracts that:
In May 2022, the Commerce Commission simultaneously executed six search warrants at two commercial and four residential properties through an operation that involved 40 of its staff members, police officers, and specialised digital forensic investigators.
The Commerce Commission interviewed the parties concerned and other witnesses to develop a timeline of when and how the parties had colluded and created or edited documents utilising competitor pricing.
