Commerce (Criminalisation of Cartels) Amendment Bill

Members, when the House last considered this bill, Melissa Lee had the call, and she has nine minutes and 40 seconds remaining should she so wish.

I do so, sir. Thank you, Mr Assistant Speaker. I think when I got up to speak on this bill the last time the bell literally rang as I stood up to say a few words, so I have no idea what I actually said in those 10 or 20 seconds.

💬 Hon Member: It was very good.

💬 Hon Member: It would have been fantastic.

Thank you so much. My colleagues behind me are very, very kind, obviously.

Thank you for the opportunity to take a call on the Commerce (Criminalisation of Cartels) Amendment Bill in its second reading today. I’d like to begin by thanking the 20 submitters who wrote to the Economic Development, Science and Innovation Committee and the 11 who actually came and gave oral submissions to the committee.

Right from the get-go, I need to say that I oppose this bill. I guess, simply put, I don’t want people at home listing to the debate to think that I’m not against the idea of people or businesses engaging in cartel behaviour. Obviously, it’s actually bad. The point at which I actually oppose the bill is that the National caucus has determined that the criminalisation of cartel conduct is actually a step too far to be put into legislative practice. We feel that that move from civil actions to criminal sanctions undermines the economy and does not actually support the ability of businesses and entrepreneurs to innovate and develop their companies. We feel that the civil actions already, in fact, impose big deterrents for businesses to act in a cartel manner.

One of the submissions that actually makes a clear statement—well, there were actually quite a lot, but I remember the submission by barrister John Land of the Stewart Germann Law Office. In his submission, he was concerned with the extension from civil action to criminalisation in terms of the definition, and the effect that legislation regulation of cartel behaviour may have on franchise networks where market allocation is a vital part of the development of each practice, and that it could, in fact, come into the determination of a cartel, as this law is being proposed, and that it is simply not appropriate and not what the law should be envisaging in New Zealand.

And there are so many franchise businesses. Some of the examples that the select committee went through and discussed were in fact quite interesting. For example, one of the things that even our departmental report sort of suggests is that when a doctor in a low-decile community gets together to agree a maximum child consultation price for the benefit of the community—I mean, that is actually price fixing. Would this be considered cartel behaviour? Pubs in a university town agreeing to impose an early closing time to curb drunken behaviour—that’s an output restriction. Competing supermarkets agreeing not to offer free plastic to customers to reduce waste—that comes under price fixing and output restriction as well. Doctors agreeing to cap fees for the elderly—that’s price fixing. Car dealers agreeing not to sell cars with perceived safety issues such as potentially faulty air bags—that’s an output restriction. Some of these things are definitely cartel behaviour, and sometimes businesses do not intentionally offend. They do not intentionally do things thinking that they’re wanting to act like a cartel or actually harm consumers.

It must also be noted that the New Zealand Treasury is not in favour of cartel criminalisation, and they believe the existing regime to be working well. I quote Treasury’s regulatory impact analysis team’s conclusion: “Because of the hidden nature of cartels and the difficulty of actually determining the costs they impose on the economy, a more precise cost benefit analysis is not feasible. This makes it difficult to precisely determine the incremental impact of criminalisation in deterring cartel conduct”. So whether it is a proportionate response to the problem posed by cartel conduct—I mean, that’s what they said. Is criminalisation needed? Even Treasury doesn’t seem to agree.

A business that falls foul of this legislation stands to lose hundreds of thousands of dollars, possibly millions, for an action deemed prohibited cartel behaviour, like some of the examples that I quoted earlier. I believe such an approach is probably better. As I’ve said, they stand to lose a lot of money and, you know, that is enough of a curb instead of criminalising it. It seems a little step too far.

Many submitters believe that criminalisation will have a chilling effect. One of the things that I would like to also possibly read out is, for example, from the New Zealand Initiative, which said that they’re concerned “the mere intention to engage in cartel conduct is insufficient to target criminal liability and something more is required to reflect the moral wrongfulness or knowledge of wrongdoing.” Some of these things are very difficult to in fact prove. I think it is quite worrying when people and submitters and businesses are actually saying that this bill would potentially create a chilling effect on the way that people actually run their business or, in fact, compete. As I said earlier, often these cartel behaviours are hidden. Nobody actually outwardly shows off that they’re behaving in a cartel manner when they do these things, and I think going that step further might actually bring them further into the darkness. I just think it is very difficult legislation.

Also, I believe that this is something that we, as a National Government, dealt with, and I don’t understand why this Minister has actually brought this back, like, I guess, a re-hash job of the legislation that National actually passed. We actually dropped the criminalisation in that previous bill, which was actually passed by this House, and this is literally just adding the criminalisation. Once again, I stand to oppose this bill, and I hope that other members will agree with me that it is very difficult if we criminalise this behaviour. It doesn’t mean that it’s wrong, but I think we have enough of a sanction for them.

Kia ora, Mr Assistant Speaker. Ngā mihi nui ki a koutou, kia ora. I rise to support this legislation. Following on from that last member, Melissa Lee, it’s incredibly curious that the previous Government supported this—the criminalisation of cartel behaviour—then they changed their mind. The Green Party at that point changed our vote to vote against the previous Government’s amended cartel legislation because it wasn’t giving the legislation the teeth that it needed to do the job. Now that the new Government—the Labour - New Zealand First - Green Government—has put crimination of cartel behaviour back inside this legislation, the Green Party is supporting it. Why? It’s because we know that cartels are so damaging for consumers, for the economy, and for the country.

This legislation allows company directors to be criminally liable for knowingly running cartels. It allows a new defence, sets the maximum sanction, provides matters relating to the proceedings of the court case, and provides the two-year transitional period.

Cartels reduce competition. They act against the interests of consumers and they keep those prices high. In a small country such as New Zealand, with limited players in a market, it’s critically important that we have the protections to make sure that all businesses can operate in a fair, transparent way, and on a level playing field.

I’d like to thank the submitters. There were 20 of them who provided written submission and 11 who made oral submissions. It was interesting to canvass the debate. Now, basically, it comes down to the idea that there’s a spectrum of, I guess you could call it, cooperating on one side, through to collusion and cartel behaviour on the other side. Now, most New Zealanders, quite rightfully so, would say that cooperative behaviour is morally and, in the case of our existing cartel civil legislation, legally appropriate, but it’s that end of the spectrum, that cartel behaviour, which is so damaging for customers.

Now, it is a balance, and what I would point out for those National members who are opposing it is that it’s not a blanket criminalisation of cartel behaviour. There’s still that spectrum of options available to the existing civil remedies for those lower-level infringements. The fact is there are exceptions and defences incorporated into this legislation to make sure that we are not being overly onerous or unreasonable, but the key point is that we need to have these criminal sanctions available as a remedy.

I can’t put it any better than Professor Peter Whelan, who is an expert on these issues, who said that criminal sanctions “should be introduced in New Zealand … [they act] to secure deterrence … [they] help bolster the administrative enforcement of cartel law in New Zealand … [and] the operation of the administrative leniency programme”. The key thing is if you’re going to only have a dollar penalty as the ultimate sanction, there is the risk that those who knowingly are operating a cartel will be quite happy to pay the fine. This is why we need to make sure that the legislation has teeth.

We are very happy to support this. We were disappointed when the previous Government took the criminalisation of cartels out. We are very glad to see it here today and, ultimately, it’s in the interest of the New Zealand economy and New Zealand consumers.

Thank you, Mr Assistant Speaker, for the opportunity to speak this afternoon on the Commerce (Criminalisation of Cartels) Amendment Bill. I have the privilege of sitting on the Economic Development, Science and Innovation Committee. As I’ve said on numerous occasions, it’s a very hard-working and collegial committee, chaired by a very able chairman in Jonathan Young.

But, despite that collegiality of the committee, unfortunately, we have reported back the bill as a bar 1, so it’s a very slim little report. We couldn’t come to agreement on whether or not it should be passed. We did, though, benefit from the expertise of the former Minister of Commerce and Consumer Affairs Paul Goldsmith, and I think he gave a very good speech earlier in the debate on setting out the reasons why National is voting against this bill, despite what has been said this afternoon in support of it, or, I guess, in opposition to cartel-like behaviour.

We will be opposing the bill, and I will run through a few of the reasons why. The first one is really because we’re not satisfied that a criminal offence is required. There’s a very substantial regime already in place around civil proceedings that are available to members of the public, or indeed agencies, should they feel that there is some sort of cartel-like behaviour occurring in industries or between companies. The threshold for a criminal offence is very, very high. We need to be very, very careful when we do create a new criminal offence that it is not creating a chilling effect, which has been talked about a little bit in the debate this afternoon.

There are two important tests, in my view, that need to be reached before you can create a new criminal offence. The first one of those is you need to prove that it is required, and I’ve already talked about the fact that there is a civil regime in place that provides for very substantial penalties if cartel-like behaviour is proven. The second one is that it needs to outweigh the costs, and there has been some discussion already about the effect that this bill could have on very well-meaning and very well-intentioned individuals and companies out there in the economy and how they behave.

On the first test, I need to turn to the excellent submission by the New Zealand Initiative. In their submission, they start by saying that they “accept that cartels may harm consumers and reduce welfare by enabling firms to raise prices above competitive levels. We also accept that cartels are difficult to detect.” But they go on to say that “It is not clear that New Zealand has levels of cartel behaviour that warrant criminalisation. As at 2011, only 16 alleged price fixing cartels had been the subject of civil decisions by the New Zealand courts during the preceding 25 years, and the maximum civil penalties have never been imposed. … Given the civil penalties already available, criminalisation is unlikely to significantly increase … the deterrence or detection of cartel behaviour.”

So it’s very questionable whether or not this bill is actually required. As the Initiative point out, there’s a substantial civil regime already in place. The most severe penalties have never been applied under the current regime, so there’s a question about why the Government wants to go further and include a criminal offence. They also provide some useful data on criminalisation, which I think has been, unfortunately, lacking probably throughout the select committee process and in terms of what Government has presented to us, or what officials presented to us, about why this is required. They haven’t proven the case as to why a criminal offence is needed.

I then turn to my second point, which is whether or not applying a criminal offence outweighs the cost of doing so. In their submission, they identify that “The costs faced by businesses exposed to risk of criminal prosecution. Despite the clearance regime for collaborative arrangements, there is a risk criminalisation will have a chilling effect on pro-competitive behaviour.”

I want to expand on that point, because it is an important point which Treasury themselves identified a few years ago—in fact, in 2011. They said, “On balance, it is difficult to see how the likely benefits of cartel criminalisation in terms of international cooperation would exceed the likely costs imposed on businesses, the Commerce Commission, and the Courts. The benefits from clarifying the laws around cartel behaviour can be achieved without the introduction of criminal penalties.” I’ll just repeat that last point, because it is an important one: the laws around cartel behaviour can be achieved without the introduction of criminal penalties.

The select committee considered these matters very, very carefully and over quite a few weeks, and one of the important points that we considered at length was around innovation, because numerous submitters did raise in their contributions that they had a concern about chilling behaviour, not just on the wider economy but also on innovation within the economy. One of the examples that was raised—which was also mentioned earlier by my colleague Melissa Lee—was around doctors and other medical professionals perhaps getting together in a community, and I’ll use Timaru as an example for argument’s sake. It might be doctors getting together in Timaru and deciding that they are going to establish a maximum price for treating young people, and I think we’d all accept in this House that that would be a good thing if that was to happen, particularly if they come from low-income backgrounds. The problem with that, of course, is that to do that, those doctors would, essentially, be agreeing to subsidise that operation by charging other patients higher fees, and so that would trigger this bill, or it would suggest there’s cartel behaviour going on.

Now, I should point out that our officials did say that there is a regime in place for different companies or organisations to go off and get approval, if they can prove there is no market benefit for them or no financial incentive for them to do so, but I wasn’t satisfied with that because the problem with doing that is there’s a huge cost in doing so. It’s tens of thousands of dollars to go off and get one of these approvals by the Commerce Commission to say that you’re able to behave in this way. A huge cost is involved, and so I just can’t see why we would support that.

The second issue that the committee grappled with was around franchises. Again, there were some valid questions around whether or not franchises compete with one another or whether they essentially have a market to themselves. I think we’d all accept that perhaps McDonald’s in Ashburton—there is only one McDonald’s in Ashburton—would not be competing with other McDonald’s franchises, but that rule doesn’t strictly apply perhaps to Starbucks in Wellington, where they seem to be on pretty much every second corner. So if you’ve got a McDonald’s franchise in Ashburton, they would justifiably say that they are not engaging in cartel behaviour by fixing prices, but that rule doesn’t apply for other franchises.

So that’s one of the many reasons, I think, why the Franchise Association of New Zealand did oppose the bill. There were 20 submissions on the bill, as has been heard earlier. The majority of those submissions were against the bill. The Franchise Association of New Zealand was just one of those, but there was also a large number of some of our largest law firms in the country.

I do want to turn first to Russell McVeagh’s submission. In it they say, “We remain of the view that the administration and the enforcement costs of the criminalisation of cartel conduct are likely to be disproportionate to any benefit, and that the claimed deterrent effect does not outweigh or compensate for the potentially chilling effect it will have on pro-competitive collaboration between competitors.” They go on to say that “The investigation, enforcement, and prosecution of offences facing significant criminal sanctions will be a significant departure from the Commission’s existing expertise and experience in enforcing breaches through civil proceedings.”, and they go on to name five or six different Acts that will be included as part of that.

One of the concerns I have is that given that there’s this new power being applied to the Commerce Commission, it just, frankly, comes down to resourcing, because, as we’ve seen in recent days, there’s been other legislation going through in the name of the same Minister, Kris Faafoi, which would provide for market studies, and, in fact, it would give the Commerce Commission the ability to determine whether or not they have their own market studies. So that will put more work on to the Commerce Commission, and this piece of legislation will put additional work on to the Commerce Commission. So that will be one of the many questions I will be asking the Minister during the committee stage.

I did have a number of other points I did wish to make, but I see my time is rapidly diminishing, so I will leave those until the committee of the whole House. I’m sure members opposite will be very pleased to listen to them. I just want to wrap up by saying that we do support the overall intent of the legislation, which is, of course, to reduce cartel behaviour, but what we don’t support is the criminalisation, including creating another offence when it’s not required.

This is a split call—five minutes.

Thank you, Mr Assistant Speaker. Let me just start by saying that this bill is another example of why we are on this side of the House. This is about the Government actually looking after the rights of the consumers—the little guys. That’s exactly why we are doing this. What we have to do—the means that we are using to do it—are through this particular bill here, the Commerce (Criminalisation of Cartels) Amendment Bill.

Now, when I go back home and I talk to friends and family about cartels, they don’t really understand them. You see, it’s not the common man’s kind of language: “cartels”. When you’re talking about cartels, generally people that are embarking on that kind of behaviour are people that earn quite a bit of money. You’re talking about big corporations. So when you’re talking about that kind of behaviour, which is anti-competition and considered to be one of the evils of the business community, then it needs to be dealt with in the same kind of language and with really tough penalties.

The Commerce Commission was one of the submissions that we had before us, and, in fact, they too agreed that with stronger penalties it would lead to better outcomes for consumers. Let’s just think about that for a moment, because they were adamant that financial payments are deterrents—yes—but, actually, if you really want to discourage the bad behaviour, you actually have to step up with very severe penalties. So the criminalisation aspect is obviously what we’ve been talking about quite a bit throughout this whole process.

Putting more people in jail isn’t exactly why I came into this job; I came in here, actually, to look after New Zealanders. But what I do understand is that when we’re talking about cartel-like behaviour and we’re talking about markets going awry, then, actually, we absolutely need to step up. Overseas experience has shown that, as I say, financial penalties contribute towards deterring those corporations—big money—but individual criminal sanctions also play an important role in deterring that kind of cartel behaviour.

So it is with that in mind—and also, I guess, just an acknowledgment that, yes, we did have some submissions that were in favour, and we also had some that were against. In terms of weighing it up, we as a committee looked over it, and we as a Government are really happy to put our support behind this piece of legislation. It is a good piece of law that we will be making today. This is the second reading; there’s still, obviously, the committee stage to go as well.

💬 Andrew Bayly: You’ve got another two minutes.

I’m done. I commend this to the House. Go!

Thank you. It’s a pleasure to be talking on the Commerce (Criminalisation of Cartels) Amendment Bill’s second reading. Well, that member who just resumed his seat, Tamati Coffey, could get three minutes out of this—amazing. You know, this bill, actually, is essentially a National Party bill, which the previous member didn’t really seem to understand, although this Labour - New Zealand First Government wants to put that littlest extra twist into it—that criminalisation stuff. And I tell you what, it’s the same issue that we discussed last night around the Commerce Amendment Bill: this is a Minister, the Minister of this bill, Kris Faafoi, who is a soft touch—a soft touch. Because we’ve now had three pieces of legislation where all these little twists that the Labour - New Zealand First Government want to make are the extra bit that all our former Ministers on this side of the House went so far to make the changes—and you’ve nicked all our bills—but you then just accepted, willy-nilly, what the officials have said to you.

ASSISTANT SPEAKER (Adrian Rurawhe): Just to remind the member: I didn’t nick anything.

Yeah. Thank you, Mr Assistant Speaker. So let’s have a talk about what a cartel is, because I didn’t hear that from the previous speeches. So a cartel is now defined as a situation where two or more businesses agree not to compete when engaging in one of the following activities: price-fixing, restricting output, or allocating markets. And the thing about cartels is that, currently, it’s a criminal offence. In fact, it’s quite a substantial criminal offence. We’re very careful at the moment about making sure that cartels do permit—you can undertake certain arrangements, which are collaborative arrangements, vehicle supply arrangements, and joint buying and promotion. So all this is bona fide—you’re able to do that. But the cartel where we have this price-fixing and restricting output—we all agree with that. We agree that that should not occur, and we agree that the Commerce Commission should do that. That’s a given. But at the moment, we have severe penalties for activities that involve that, and they are civil. It’s absolutely incredible, in terms of the extent of those. For instance, the sanctions at the moment: if you’re an individual, you can be fined up to $500,000; if you’re a corporate, you can be fined up to $10 million—$10 million if you’re a body corporate. So the issue around this is that we’ve already got very significant civil penalties, and very few people actually want this. In fact, not even the Commerce Commission wanted this change, which I find quite remarkable—that the Commerce Commission didn’t want it.

But let’s see who else didn’t want it. I think they are fairly august and well-known organisations: Buddle Findlay, quite a significant law firm; Business New Zealand; Franchise Association of New Zealand; Horticulture New Zealand; Institute of Directors; Matthews Law—he does competition law, based in Auckland; New Zealand Certificate of Building Association—they’re a pretty good body, and I’ve had a lot to do with them; Russell McVeagh—again, well-known lawyers; Simpson Grierson—yeah, pretty good lawyers, too, I must admit; and the business New Zealand Initiative. Not a bad sort of cast of people who are saying, “Let’s not do this. Let’s not do this. Let’s not move into the criminalisation aspect.” And I think that is a pretty weighty group who are saying there are good reasons not to do this.

I think the issue around the criminalisation is that you get into uncharted territory. First of all, there’s no proven case why we should be moving into criminalisation, but the thing is—and this is where the Government just goes where no one else wants to tread—what the Labour - New Zealand First Government has done in the last 48 hours is pass a whole range of bills that basically say, “We do not worry about commerce in New Zealand.” The Minister talked about consumers last night. He’s also the Minister of commerce. He should be concerned about commerce in New Zealand. He should be protecting and making sure that they’re operating correctly—and we all have that concern—but what he’s doing, and what you guys over the other side are doing, is putting in place these arrangements that take it a step further and put us into an area where it has a chilling impact on people, on businesses, and on commerce in New Zealand.

💬 DEPUTY SPEAKER: I’ll just remind the member that I’m not doing it.

Thank you, Madam Deputy Speaker. Now, I just want to start, first off, with my contribution this afternoon, where the previous member who’s just resumed his seat, Andrew Bayly, made a comment about the fact that my colleague Tamati Coffey spent only three minutes discussing this legislation. And I say—I put it to that member—it’s about quality, not quantity. I suggest that that member might like to consider that the next time he stands to take a call.

Anyway, so I’m going to begin by talking about this piece of legislation. Thanks to the submitters who contributed and to the Economic Development, Science and Innovation Committee, which I’m recently a new member of. I am really enjoying learning about this legislation and all the other pieces in front of us.

Basically, what this is about is stopping cartel behaviour. It’s about protecting consumers, right? So consumers—and people in general—are actually what this Government is all about looking after. Now, most businesses act in a proper way and comply with everything they’re supposed to, but there are the odd rogue ones that don’t. There was a member that spoke previously about the fact that we don’t need to have a criminal offence with regard to cartel behaviour because it’s not happening on that large a scale here in New Zealand. Well, I say: is that a reason not to, or is now not the perfect time to do it, before this starts to happen? So that’s just what I would have to say around that.

Consumers need to be able to trust businesses—that businesses are acting with the best of intentions. When businesses are doing that and not participating in cartel conduct, then we see that, actually, competition is better—competition is better among businesses, it’s better for consumers, and it leads to lower prices and better quality goods and services. I say that now is the perfect time—the perfect opportunity—to implement this piece of legislation to protect our consumers now and into the future. I commend this bill to the House.

Thank you, Madam Deputy Speaker. I rise to oppose this bill, this unnecessary bill, the Commerce (Criminalisation of Cartels) Amendment Bill, at second reading. Fundamentally, if Parliament is going to pass laws, we are going to do something that is going to—in the really good cases, we enable things, but all too often we constrain activities. In this case, we can do damage to markets, which, ultimately, harms consumers. So we should be undertaking legislative change when there is an absolutely clear need to do so, where there is evidence to support it, and where the benefits that we can very reasonably predict will flow through are greater than the costs that could be incurred by doing it. This bill fails on pretty much every count.

To begin on the first part, in the last term we passed a commerce amendment bill around cartel behaviour which places very significant—quite onerous, if the court feels it is necessary—and very serious civil penalties on individuals and bodies corporate that would be found to be conducting their activities in such a way. There is no fundamental—I mean, we’re talking about things that could be around $10 million or potentially even more in terms of a fine on a company, and half a million dollars on an individual. These are sufficiently serious penalties to deter people or at least make them very careful about how they go about their business activities.

We do acknowledge and we should acknowledge—we certainly did when we went through that bill—that there are instances where collaboration between companies can, in certain perspectives, look like it might be transgressing the sort of pro-competitive behaviour that we want and need in our market place but where, often, it is the case that it is not. So we’ve already got the law to capture this, the law to investigate it, and the penalties to take appropriate action, and that, to an extent, will also provide a deterrent from individuals and companies participating or acting in this sort of nefarious manner. So there is no clear rationale as to why we must have a criminal sanction.

Next, we should look for—OK, what’s the evidence that there is such egregious behaviour that it might be worthwhile having this? The reality is—and as the former speaker that just resumed her seat a few moments ago, Jo Luxton, pointed out—that evidence doesn’t exist. No one claims that they have instances in New Zealand where such egregious behaviour has taken place that people should be locked up, so why on earth are we putting in such a sanction when we’ve got no grounds for its need in this country?

Now, it doesn’t surprise me from this Government, because just this week in the Commerce Amendment Bill—the other commerce amendment bill—we saw them do just that in the greater regulation-making powers to do with regulated airports. The officials, on the introduction of that bill, in their regulatory impact statement, pointed out that there was no evidence that the current regulatory regime for those regulated airports was not working. They also said that even if it wasn’t working, it would have a minimal impact on consumers anyway, which should be another huge test for amending the Commerce Act. But, none the less, they still said, “Let’s go ahead and give greater regulatory powers.” We resisted that. There was a reason why we changed our position and voted in support of that bill in the end, and it was to seek to help New Zealanders with the costs they’re bearing at the petrol pump, but, none the less, we resisted that because it was a case of creating greater regulatory authority when there was no evidence of a need existing, and this particular bill also fails that hurdle.

On the benefit side, if we’ve already got the ability to sanction people and companies appropriately or well or harshly, and those sanctions themselves form a level of deterrence, then what are the benefits that could accrue through criminalisation that we wouldn’t otherwise get? Really, they should be benefits related to deterrence of the behaviour, because we do have some very harsh penalties already if it is investigated and found. There is nothing in the bill that suggests that there is anything extra to be gained for the consumer—after all, the Commerce Act is about protecting the interests of the consumer. So there is nothing in the bill that evidences or even talks about the additional benefit that consumers would get—New Zealand citizens would get—if we were able to lock people up instead of just fining them for such behaviour.

But let’s look at the cost, or the potential cost. Officials were really quite clear on this, and it was in the regulatory impact statement. Officials like Treasury and others oppose these measures because they believe that the criminalisation element could have a chilling effect on business investment and pro-competitive collaboration between businesses in New Zealand. Let’s bear in mind, where we do have pro-competitive collaborative behaviour, when businesses, for their own mutual benefit but also the ultimate end benefit of their customers—potentially joint customers—are working together, that is not necessarily a bad thing. In fact, in most cases, it’s an incredibly good thing.

If you want to take a simple example—the relationship didn’t always work too well, and at times it went to court, but a simple example is if you take IBM as once the greatest manufacturer of personal computers, and Microsoft, the near-monopolist—at the time—producer of operating system software for those computers. They ended up competing—because IBM also created software, and a lot of it—in the market of software, but they worked together in terms of what they were able to bring to companies, to individuals, to homes across the world, in fact, by working together on being able to put together a package of hardware and software that made the personal computer a great utility not only for businesses but for people. That’s a simple example of where two competitive firms can be working together for the common benefit not only of their firms but, particularly, of the market and their consumers.

So do we really want to have a situation—and some officials believe this is something that could arise from these criminalisation provisions—where businesses who could work together constructively, not only for the benefit of them and their shareholders but, ultimately, for the benefit of consumers, are constrained or scared from undertaking those positive actions, those positive investments, because they’re somewhat worried that the big guns are going to come out for them, and if they are found to have strayed beyond a mark, that the sanctions that could be imposed on them could extend as far as criminalisation?

I don’t think and I certainly don’t believe that the Government has put up any credible argument to suggest that the additional benefits of criminalisation for cartel behaviour, over and above a civil penalty regime, outweigh those costs or those potential costs. That’s another reason why Parliament should be opposing this bill. We don’t need it. The costs it could impose—not actually on those businesses. I want to make this point very clear, because, ultimately, that pro-competitive collaborative behaviour works in the best interests of consumers. So why would we put something in place that, ultimately, has more cost in terms of missed opportunities for consumers than additional benefits it provides?

But, alas, none of that surprises me with this Government. We see it time and time again with legislation that they bring to this House, with regulations they seek to make, and with their rhetoric up and down the length and breadth of the country. They fundamentally have an issue: they believe that all business is bad and that business people, if left unchecked by things like the criminalisation of cartel behaviour, will run amok, will seek to rip their customers off, and will seek to cause them harm in any way they can, and that they can only be managed through the iron fist of Government regulation and legislation.

Not only is that fundamentally and palpably wrong, but in doing so they miss the heart of the Commerce Act, which are competitive markets to the benefit of consumers. Competitive markets aren’t simply prices or big sticks held up to businesses; competitive markets are borne out of business people and businesses investing: investing in new products, investing in new technologies, or creating new services and products of utility to customers. Along the way, in doing that, they create jobs and they create higher-paying jobs. The attitude this Government consistently takes is to the detriment of the consumer. I oppose this bill.

It’s an absolute delight to stand here and speak in favour—just like my comrades here on this side of the House—of the Commerce (Criminalisation of Cartels) Amendment Bill. This bill seeks to address the mistake—yet another mistake—that was made by the previous Government. Here we are, yet again: another example of this Government cleaning up the mistakes of the previous Government. This was touched on by Andrew Bayly—“Old Yeller” himself—who stood there and said that this is essentially a National Party bill. And he was right, because when this bill was first introduced to this House back in 2012, it proposed the criminalisation of cartels, and they backed off. They fluffed it up, and here we are having to fix their mistakes.

Madam Deputy Speaker, if you would indulge me, let me read this quote, please: “I believe that with the introduction of criminal sanctions,”—in relation to cartels—“New Zealand stands to benefit in three ways. First is the increased deterrence of hard-core cartels due to the severe sanctions, associated stigma, and possible restriction of an individual’s freedom. Second is the increased detection of hard-core cartels from improving the effectiveness of the leniency regime by increasing the value to the individual applying for leniency. The leniency regime is administered by the Commerce Commission, and encourages cartelists to come forward in return for leniency. Third is an improved ability to cooperate and detect cartel conduct.” That wonderful quote, which outlines exactly why we need to criminalise cartels, was made by the National Party Minister who introduced the bill in the first place: Craig Foss.

💬 Hon Ruth Dyson: What happened to him?

What happened to Craig Foss? I spend a lot of time in Hawke’s Bay. The Wairarapa electorate goes up to central Hawke’s Bay, just above Waipawa—in fact, I’m going to be there tomorrow—and what do I hear whenever I walk around Central Hawke’s Bay? They say, “Bring back ‘Fossy’ ”. They say, “Bring back Craig Foss. At least he lived in the electorate, and at least he worked hard.”

💬 DEPUTY SPEAKER: First of all, you must refer to people by their proper name—

And that’s what I tell them, Madam Deputy Speaker.

💬 DEPUTY SPEAKER: —and, second of all, I’d like you to speak to the bill.

Dead right—what a great bill.

This bill will fix the mistake that the previous Government mixed up, because what it will do is it will increase penalties and make them a criminal matter when having them as a civil matter simply does not fit the bill. Craig Foss thought that, I think that, and my comrades on this side of the House think that because, of course, a civil matter—[Interruption] All I hear from the other side of the House is jealousy—jealousy. When they look to their left and their right, like I do now—when I look to my left, I see my mates, and when I look to my right I see my mates, and then, when they look to their left, they see knives and daggers. That is not a very safe environment to be in. But, over here, we’re getting things done, like looking to pass this bill.

In a civil matter, if found guilty, of course, the company will pay or the insurance will pay, and in a situation when cartel behaviour can significantly benefit a business, a fine that is disproportionate to the potential profit is not a fair deterrence.

💬 Dr Duncan Webb: No. It’s just a tax.

It is just a tax. My learned colleague from behind me, Dr Duncan Webb, who knows about these things and who spoke in favour of this bill, says that this is where we should move.

They say that this will have a chilling effect. I say that what will have a chilling effect is behaviour that works against the interest of consumers. This Government stands here proudly introducing bills that will help consumers, so that people can have faith that businesses are acting in good faith, within the rules, and so that we as consumers can operate within a system that gives us confidence. I have no hesitation in commending this bill to the House.