Manesh Kumar was caught cold, fixing tender prices on an Auckland bridge contract when details were inadvertently emailed to the head contractor. Mr Kumar becomes the first to be convicted under revised Commerce Act rules criminalising cartel behaviour; prior to 2021, price-fixing attracted a civil penalty only.
He pleaded guilty to four Commerce Act charges; sentenced to six months’ night-time curfews as community detention, plus 200 hours community work.
His company MaxBuild Ltd also pleaded guilty; fined $500,000.
The High Court was told price fixing was discovered in respect of two Auckland projects: a northern corridor improvement project and repair of a Middlemore railway bridge.
Mr Kumar’s MaxBuild specialises in bridge jointing work.
In 2022, an un-named bridge jointing contractor sent in its quote for the northern corridor project, inadvertently including an email chain evidencing discussions with Mr Kumar agreeing its quote would be higher than MaxBuild’s quote.
The head contractor immediately contacted Commerce Commission.
A Commission swoop on MaxBuild’s offices and Mr Kumar’s home uncovered similar price fixing in respect of the Middlemore project.
MaxBuild immediately withdrew from its Middlemore contract.
Commerce Act prosecution followed.
Both Mr Kumar and MaxBuild pleaded guilty to price-fixing.
In sentencing, Justice Wilkinson-Smith said cartel pricing damages confidence in the tendering process. Costs are borne by taxpayers where projects are publicly funded.
She indicated large companies with a high national profile can expect to be punished more severely than companies operating within a small local market.
Mr Kumar’s MaxBuild is at the lower end for market size, she ruled. It employs some thirty people.
Imprisonment for Mr Kumar is not appropriate, she said. He needs to be available on the job each working day to ensure company operations continue.
Mr Kumar was sentenced to six months community detention; a nightly curfew at home between the hours eight pm and six am, plus a period of community work.
Justice Wilkinson-Smith imposed a $500,000 fine on Mr Kumar’s company Maxbuild. This figure was the amount offered as reparations, being Maxbuild’s contract price received for the northern corridor contract.
Maximum fine fixed by the Commerce Act is ten million dollars.
The dollar amount of civil penalties imposed previously are expected to provide a guide as to the level of fines levied for what are now criminal offences under the Commerce Act, Justice Wilkinson-Smith said.
But under the new rules, defaulters now face a criminal record, and the possibility of imprisonment in egregious cases.
R. v. Kumar & MaxBuild Ltd – High Court (18.12.24)
25.051