A policy used by the Commerce Commission to encourage individuals to inform on their anti-competitive partners looks set to stay once the behaviour becomes criminal.
From 8 April 2021 a cartel – where two or more businesses agree not to compete with each other – would be a criminal offence, rather than a civil one.
The Commerce Commission is seeking feedback on what this would mean for its leniency policy, something competition lawyer Tony Dellow said had been an effective tool in exposing cartels.
The policy granted leniency for the first person to come forward and disclose the behaviour, providing certain conditions were met, including that the individual had not coerced anyone into the cartel.
Under the law change the commission could still grant leniency, but it would be up to the solicitor-general to grant immunity from prosecution.
Dellow said the prospect of a harsher penalty would not deter people from coming forward.
“The fact that people could go to jail possibly makes it more likely that people that were in the cartel that would attract liability might be more likely to use the policy.
“It would get them off the hook.”
He said the policy had been good for consumers as it made cartel arrangements inherently unstable because they could be reported at any time.
The commission wanted to know from market participants what the new policy should look like, including whether the threshold for leniency should be higher, clarifying what information could be used in a court proceeding and what the criteria for referring immunity should be.