Business bosses caught ripping off customers will face jail under new law

Businesses and individuals caught ripping off consumers by price fixing or other cartel-like behaviour face jail time under a new law coming into force this week.

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A new law criminalising cartels is coming into force this week. Source: 1 NEWS

Until now, those found guilty of such behaviour faced hefty fines.

But, the Commerce Commission says the seven-year jail time for cartel behaviour – anything from price fixing, to bid rigging, to dividing up markets – brings New Zealand into line with other countries.

“We’ve investigated a number of cartels in recent years,” Anna Rawlings from the Commerce Commission told 1 NEWS.

“We recently had a case involving price fixing in real estate industry, and we looked at other cases in the agriculture sector and the construction industry.”

A cartel is where two or more businesses collude to not compete with each other.

Recent cases here include Hamilton real estate agents fined $4 million last year.

That brought to $23 million the total penalties against 13 real estate companies and three individuals in the last few years.

Last year, a Nelson pharmacy was fined $344,000 and a director $50,000 for price fixing.

Carter Holt Harvey was fined $1.85 million in 2014 for “classic” price fixing breaches in 2014.

DLA Piper lawyer Alicia Murray says New Zealand has a high risk of cartel activity because it's such a concentrated market, where there is often only two or three competitors.

She’s helped develop AI technology for businesses to ensure they don’t break the law. That mines data to detect irregularities.

The Commerce Commission is running an ad campaign to remind people what cartel behaviour looks like.