Antitrust Law Daily Wrap Up, ANTITRUST NEWS: New Zealand Commerce Commission announces imposition of penalties on final air freight cartel participant, (Apr 10, 2014)

The New Zealand Commerce Commission has announced that, on April 8, the High Court in Auckland ordered Swiss company Kuehne + Nagel International AG to pay a penalty of $3.1 million plus costs for breaches of the Commerce Act.

Kuehne + Nagel is the last defendant in a long-standing case brought by the Commerce Commission against six international freight forwarding companies for a range of hard core cartel conduct. The other five defendants admitted their role in the cartel and paid penalties in 2010 and 2011. Kuehne + Nagel unsuccessfully challenged the Commerce Commission’s jurisdiction in both the High Court and Court of Appeal. Kuehne + Nagel’s penalty brings the total penalties ordered in this case to $11.95 million and sends a strong message to the business community that cartel behavior is unacceptable, it was noted.

Kuehne + Nagel admitted to being part of a secret cartel that called itself the ‘Gardening Club’. The Gardening Club agreed to charge surcharges on air freight forwarding services from the UK to countries including New Zealand, ostensibly to cover the costs of increased security measures imposed in the UK. The cartel participants agreed that they would each pass on certain costs to customers, rather than compete in the usual way and determine their own pricing structures and price levels.

In the penalty judgment, the court recognized the importance of deterring international cartels from extending their operations into New Zealand. “It follows that the penalty must therefore be set at a level to achieve that deterrent objective bearing in mind the significant size of the companies involved,” the court stated.

“This case involves deliberate and secretive conduct by the freight forwarding companies, but it’s important for businesses to recognize that cartels can also take on a less obvious form, like a conversation about pricing at a trade association meeting or a ‘nod and a wink’ agreement between competitors not to discount a certain product. Businesses should always ensure that they make any pricing decisions independently, and bring any concerning activities to the Commission’s attention,” said Commission Chairman Mark Berry.

Companies: Kuehne + Nagel International AG

News: Antitrust