PCG
Wrightson has been fined $2.7 million and Rural Livestock $475,000 for
colluding on fees charged for implementation of a national animal tagging
system.
Legislation in 2012 required all cattle
and deer be tagged with a radio frequency identification device to track stock
movements. Stock and station agents
became the focal point for implementation because all stock moving through saleyards
required a tag. There are twelve agents
throughout New Zealand. PCG Wrightson,
as the biggest, took the lead.
The High Court was told PCG Wrightson
held informal discussions with other stock agents before sending out a letter specifying
minimum prices to be charged for tagging un-tagged stock arriving at saleyards
together with increased yard fees and administration fees to cover costs of the
national scheme. In-house legal counsel
at PCG Wrightson warned this letter could amount to price-fixing, in breach of
the Commerce Act. A follow-up letter was
drafted, advising each agent they should set their own prices. This letter was sent to only three of the 68
saleyards in New Zealand. PCG itself has
an interest in some 50 of these saleyards.
The Commerce Commission took action,
arguing general use of the Wrightson-recommended prices breached the Act. PCG Wrightson pleaded guilty and was fined
$2.7 million. Justice Asher said the
best guess was that PCG Wrightson gained a commercial advantage of less than
one million dollars from fixing prices, but a heavy penalty was neccesary
because the company was a key driver in setting these prices. Rural Livestock also pleaded guilty. It has interests in seven South Island
saleyards, holding a seven per cent share of the national market. The company was fined $475,000. Payments are to be made over a two year
period. Instalment payments were ordered
to preserve Rural Livestock’s financial stability.
Commerce
Commission v. PCG Wrightson & Rural Livestock – High Court (22.12.15)
16.027