It was a cosy business arrangement between two Christchurch families lasting nearly two decades, blown open as a cartel only after a spat between second generation children. Canterbury Industrial Scrubbing Ltd was ordered to pay a $51,000 penalty for market collusion in breach of the Commerce Act.
The High Court was told that Industrial Scrubbing’s patriarch Paul Jamieson had informal discussions prior to 2003 with Owen Kinnane, who then controlled business rival Canterbury Industrial Sweeping Ltd, about how they would operate their respective businesses.
Between them, they held a large slice of the Christchurch market for industrial floor cleaning. A 2007 deal saw Jamieson’s Industrial Scrubbing concentrating on its speciality service, referring dry sweeping work to Kinnane’s Industrial Sweeping. Similarly, Industrial Sweeping referred any floor scrubbing work to Industrial Scrubbing.
This arrangement broke down after the two retired and their children graduated from employee to management.
Daniel Jamieson assumed control of Industrial Scrubbing; Sarah Kinnane, Industrial Sweeping, which she re-branded as CanSweep.
Industrial Scrubbing was the first to break ranks. In early 2020, it purchased five industrial sweepers and began offering sweeping services. This was because Industrial Sweeping’s service standards had slipped since Sarah Kinnane had taken over, Paul Jamieson said.
Emails flew between the two with Daniel Jamieson threatening to ‘actively’ target her customer base.
The High Court was told the two sides met in person early 2020.
Mr Jamieson followed up with an email summarising what he described as ‘outcomes we agreed on.’ The points highlighted included: agreeing on a list of customers described as ‘off limits,’ not to be poached; a general agreement to liaise over future work; and an agreement not to make negative comments to customers about the other’s business.
Ms Kinnane’s Industrial Sweeping did not respond, beyond sending Mr Jamieson Commerce Commission guidance notes on what amounts to cartel behaviour.
He then aggressively bid for Industrial Sweeping’s clients offering a twenty per cent fee discount, fixed for two years.
Daniel Jamieson later admitted to the Commerce Commission that both he and his company were party to market collusion in breach of the Commerce Act in respect of both the 2020 face-to-face meeting with Ms Kinnane and the earlier informal deal agreed between their fathers.
The High Court confirmed a negotiated fine of $51,000 payable by Canterbury Industrial Scrubbing; payment to be made by instalments over three years.
The High Court was told Industrial Scrubbing is not able to pay a greater fine. Mr Jamieson was described as not being in a position to pay any fine at all.
Financial details for both Mr Jamieson and his company were suppressed.
Commerce Commission v. Canterbury Industrial Scrubbing Ltd – High Court (18.06.24)
24.153