Commerce (Criminalisation of Cartels) Amendment Bill

I seek leave for all provisions of the Commerce (Criminalisation of Cartels) Amendment Bill to be taken as one debate.

CHAIRPERSON (Adrian Rurawhe): Leave is sought for that purpose. Is there any objection? There appears to be none.

Parts 1 and 2 and clauses 1 to 3

I’d like to get things ticked off in this committee stage of this bill and, first of all, thank the Economic Development, Science and Innovation Committee for its consideration, of sorts, of this bill. The bill amends the Commerce Act to introduce a new criminal offence for cartel conduct. Cartels are agreements between competitors to fix prices, restrict output, or allocate markets. Cartels enable firms to charge more for less, and cartel conduct, obviously, is widely regarded as the most egregious form of anti-competitive conduct.

Can I move to clause 4 in Part 1, which is the main provision that introduces a new criminal cartel offence new section 82B, in which there are two linked offences. Offence one, entering into a cartel agreement: a person commits an offence if the person enters into an agreement that contains cartel provisions and intends at that time to engage in “price fixing, restricting output, or market allocation” or (b) offence to giving effect to a cartel agreement.

I would like to add that there is already a civil regime for cartel behaviour. I believe the previous Government also proposed a criminal regime for cartel behaviour, but the record will show that they lost their ambition in that respect. I will point out that there is a Supplementary Order Paper (SOP) 194 for this bill. The first change in the SOP is to amend the category of offence for the purposes of the Criminal Procedure Act. After some discussion, I think with the Ministry of Justice, the change from the category 4 to category 3 offence means that these cases may be heard in a District Court or referred to the High Court, as opposed to only being heard in the High Court, and the lower category of offence is consistent with other similar commercial offences, such as insider trading or market manipulation.

I will just take a small call but pre-empt some of the debate that is going to happen today, probably from the Opposition in opposition to the introduction of this new criminal regime to cartel behaviour, and to also just forewarn the Opposition that I’m looking forward to rebutting some of that opposition with their own words in the previous Government.

The Minister of Commerce and Consumer Affairs can say whatever he likes, quite frankly. This bill and its Supplementary Order Paper (SOP) 194 shows that we shouldn’t be listening to a word of it. We do oppose this bill. We have since its introduction. We put in civil offences for cartel behaviour in the previous term. Our position has been that they are very onerous and they are a very strong deterrence. All through, along with some submitters, we have said that this attempt to put criminalisation provisions in will simply lead to uncertainty and the potential for otherwise fundamentally innocent people to be criminalised. The Minister has introduced an SOP, and I’ll just make a point that he’s making a bit of a history now, a bit of a trend, of introducing significant SOPs just a few hours ahead of the bill being debated—this one, and there’ll be another one that we’ll be debating when we move on to the next bill. And that SOP quite as clearly shows—or rather the regulatory impact statement that comes with it shows—that officials have realised lo, the bill as it stands runs the very real risk of criminalising people whose behaviour is actually, if not reasonable, certainly not that of meeting the standard of criminal behaviour.

Minister, if you hadn’t put this bill forward in the first place, we wouldn’t be trying to sort out the mess that your officials are trying to sort out for you with this SOP. It was never required, and, actually, the argument they are using in the SOP is not even elegant; it’s an absolute kludge, it’s a bodge to try and fix up inferior and unworkable provisions. They’ve not reached a solution. They’ve not come up with an elegant way of dealing with this problematic potential. They have said the best way we can possibly try to deal with it is here are three options—none of them are actually perfect. Let’s go with this one—at least it’s sort of the worst of the three. And yet the Minister should read his own officials’ documents. He’d have a good read and a good chuckle—I certainly did.

So we’re still trying to go forward—the Minister is—with a flawed bill, which is only marginally less flawed in fundamentally the viewpoint of his own officials. It’s only marginally less flawed than it was on Monday. We opposed it beforehand for very good reasons. We will continue to oppose it. Minister, the best thing you could do is one of two options: send this thing back to select committee, to kick it around again where it should be, or actually, even better, defer it until officials maybe one day can come up with a genuine solution with genuine, practical, workable provisions for these sorts of issues, rather than the bodge you’ve brought to the House.

I’d like to quote from a previous debate on this issue: “I am delighted with this bill. It is clearly taking on the evils, the worries, and the concerns around hard-core cartel behaviour,”—yeah, it’s, guess who?—“it does address the negatives of cartel behaviour, and it is important that it does so, because if it did not, we could end up with a terrible situation where the tiny minority—the nameless and the faceless—are controlling outcomes, delivering things that many do not want.”

The person whose name is beside that quote from a parliamentary Hansard is Mr Brett Hudson himself back when the National Party had some bottle. Also, another one of his colleagues, and I’m going to quote Simon O’Connor here: “This [criminalisation of cartels] is ultimately … at the heart of what the National Party believes is the way forward for our economy.” Mr O’Connor being probably a very good local member of Parliament said he was, and I quote, “I was talking, actually over the last 24 hours, with some people in this sector, and they are very keen to see this bill progress. They are keen to see that that balance occurs here between allowing pro-competitive collaboration but also making sure that we are not going to have those sorts of hard-core cartel operations either.”

As I predicted, the words of the National Party have come back to haunt them. And I’m looking forward to—I’m only going to take a short call, because I would like to challenge them to keep taking calls, because I’ve got a tonne of this stuff. Ha, ha! And Mr Hudson, it’s not looking good for you. So, you know, whatever happened to the good old, strong National Party who were taking proactive measures against hard-core cartel behaviour? So I would like to challenge—actually, I’m looking forward to it. I’m looking forward to the many calls between now and probably 9 o’clock from the National Party, to speak and oppose this piece of legislation, because every time they say something negative on that side of the House, I’ve got something to come back and throw back right in their faces.

I was slow to get to my feet because my jaw had dropped to the floor and I had to pick it back up. Often in this House, I believe it’s an irony-free zone—and, yes, scuttle away from the House, Mr Hudson—because—

💬 Brett Hudson: I raise a point of order, Mr Chairperson. The member just made a reference to a member potentially not being in the House. That’s out of order.

CHAIRPERSON (Adrian Rurawhe): Did that—

Sorry, is my eyesight failing me?

CHAIRPERSON (Adrian Rurawhe): Order! Is that correct?

That the member is not in the House?

CHAIRPERSON (Adrian Rurawhe): I’m asking you: did you mention a member that is not in the House?

No.

💬 Brett Hudson: Speaking to the point of order—

CHAIRPERSON (Adrian Rurawhe): No, there are no more points of order—

💬 Brett Hudson: The member’s words were clear—“scuttling away from the House” were his words.

CHAIRPERSON (Adrian Rurawhe): E noho. I am telling you: do not speak over me when I’m standing—OK. Now, you’ve made your point of order. I asked the member the—I did not hear it. The member assures me that he did not. If he has, he will have to come back to the House and state so. OK? So, Greg O’Connor.

💬 Hon Iain Lees-Galloway: I raise a point of order, Mr Chairperson. Thank you, Mr Chairman, and it is a genuine attempt to bring some clarification to this point. I think the point that Mr Hudson was making was that, potentially, the member speaking referred to him exiting the Chamber, rather than him being absent from the Chamber. I don’t know what your ruling might be on referring to someone exiting rather than being absent, but for the sake of making sure that the member has been correct, he responded to your question asking did he reference someone being outside of the Chamber. I believe he was correct in saying that he did not, but we might just need some clarification about him referring to someone exiting the Chamber.

CHAIRPERSON (Adrian Rurawhe): Greg O’Connor.

Mr Chair, did you want me to respond to that, or carry on with my—

CHAIRPERSON (Adrian Rurawhe): No, carry on.

Thank you, Mr Chair. As I say, the irony-free zone that exists on the opposite side of the House was highlighted again by the speech by Brett Hudson, the member opposite speaking previously.

But just more broadly, though, cartels are what this bill is about. Again, I find it incredulous that anyone would come here and speak against any legislation that ensures that cartels are put under some sort of control or some sort of sanction, because that is simply what this bill is about. We only have to look at cartels. I mean, look at American history. The anti-trusts that were necessary—we saw what was probably the most stark example in history of how having organisations or businesses out of control can affect a whole country, and we can see why it was necessary to bring that under control.

This legislation is simply a piece of legislation that’s absolutely necessary to ensure that businesses, in particular, in New Zealand—those businesses that those members opposite claim to be representing—are given a fair go and that where there is any evidence of the sort of behaviour that is described in this bill, there are meaningful sanctions. So I certainly believe that this is necessary, and I commend this bill.

The question was put that the amendments set out on Supplementary Order Paper 194 in the name of the Hon Kris Faafoi to Parts 1 and 2 be agreed to.