JUDICIAL CASES

The following cases are examples of court decisions relevant to New Zealand's competition law. They provide an indication of the types of penalties imposed for breaches of the Commerce Act.

1. The Auckland High Court ordered Carter Holt Harvey Building Products Group Limited to pay a penalty of $525,000 for using its dominant position to prevent or deter New Wool Products Limited from competing in the South Island insulation market. This was held to constitute a section 36 breach of the Commerce Act. In November 2001 the Court of Appeal ruled in favour of the Commerce Commission and upheld the High Court judgement. However, in July 2004, the Privy Council ruled in favour of Carter Holt Harvey.

2. In early 1999,Hoyts and Village Force announced their intention to merge. The companies did not seek clearance from the Commerce Commission. Following an investigation, the Commission considered the merger would result in a breach of section 47 of the Commerce Act, sought an injunction, and obtained undertakings from Hoyts and Village Force to allow for separation of the businesses in due course. The proceedings were settled in December 2000 with Hoyts and Village Force undertaking not to proceed with the merger, by separation of the businesses, and paying to the Commission a substantial contribution to its costs.

3. On 5 February 2002, the Auckland High Court ordered Giltrap City Toyota to pay a pecuniary penalty of $150,000 for price fixing in breach of the Commerce Act. The company entered into a price-fixing agreement with other Auckland Toyota dealers in June 1993. In December 1996, seven Auckland Toyota dealers admitted breaching the Act following a Commerce Commission investigation. They were each ordered to pay penalties of $50,000. Giltrap City Toyota did not admit any breach and elected to defend the Commission's prosecution. Giltrap City Toyota appealed the $150,000 penalty to the Court of the Appeal in February 2002.

4.In 2000, the Auckland High Court ordered Caltex New Zealand Limited, Mobil Oil New Zealand Limited and Shell New Zealand Limited to pay penalties totalling $1.175 million and costs of $157,500 for breaching the Commerce Act by price fixing. The Commission had alleged the three companies colluded to jointly withdraw a discount from the price of petrol at more than 50 Auckland petrol stations. The discount was in the form of a free car wash offered to customers who spent $20 or more on fuel. Caltex and Mobil took unsuccessful strike out actions against the Commission's case to the High Court and the Court of Appeal. The Courts rejected both challenges. The judge ordered Caltex to pay $450,000, Mobil to pay $350,000 and Shell to pay $375,000.

5. On 22 April 2002, the Invercargill District Court fined Meridian Energy $12,000 after it admitted six breaches of the Fair Trading Act. In December 1999 Meridian ran a retail electricity promotion inviting Comalco employees to switch from their existing power retailer to Meridian Energy. Employees were offered a cap on the energy component of their power bill, $25 off their first power bill and a loyalty rebate of 1% of their total 12-month power bill. Employees who switched complained of being charged higher rates than those set out in the offer and not receiving the $25 discount. Meridian finally applied the corrected rates and discounts for the majority of qualifying customers in September 2000. In handing down the penalty, the judge considered the difficulty of detecting the overcharging and the lack of response to customer complaints, despite repetition.

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