With
packaging company Visy Board fined $36 million in Australia for market rigging,
the Commerce Commission is pursuing the company alleging similar market
manipulation in this country. The Court
of Appeal ruled there is jurisdiction to prosecute an Australian company for
market manipulation in New Zealand.
The court was told
Visy Board and competitor Amcor Australia secretly decided in 2000 to carve up
between them the Australian market for corrugated packaging after a debilitating
price war through the 1990s. They agreed
at a top level to fix prices and divide the market between themselves. Each supposed competitor put in uncompetitive
tenders for nominated supply contracts. When the whistle was blown, Visy Board
agreed to a fine of $36 million and one of its senior executives was fined
$500,000 for breaches of the Australian equivalent of the Commerce Act.
In New Zealand,
corrugated packaging is used for the bulk supply of commodities like fresh
meat, fruit and vegetables. It is also
used in secondary packaging of manufactured goods like beverages and processed
foods.
The Commerce
Commission alleges market manipulation by Visy Board and Amcor Australia
extended to New Zealand. As an example, a
bulk supply tender to Mainland Meats saw Amcor prices significantly below Visy
Board’s tender, and the reverse in tenders for Tip Top packaging. Fonterra contacted Amcor saying the tender
pricing for Tip Top looked suspicious when Amcor prices came in at twenty per
cent higher than Visy Board.
When sued by the
Commerce Commission, Visy Board said it was an Australian company operating out
of Australia and could not be sued in the New Zealand courts for any alleged
breach of the Commerce Act.
Both Visy Board and
Amcor operate New Zealand subsidiaries of their Australian businesses.
The Court of Appeal
ruled that the High Court rules gave jurisdiction for New Zealand courts to
consider wrongful conduct carried out in New Zealand and the Commerce Act
specifically covers decisions made outside New Zealand to the extent that those
decisions affect the New Zealand market.
Commerce
Commission v. Visy Board – Court of Appeal (31.08.12)
12.032