Commerce (Criminalisation of Cartels) Amendment Bill

on behalf of the Minister of Commerce and Consumer Affairs: I move, That the Commerce (Criminalisation of Cartels) Amendment Bill be now read a third time.

This bill is an important element of the Government’s reform programme to strengthen New Zealand’s competition law, in line with some of our major trading partners. The criminalising of cartel behaviour is the second legislative step that this Government has taken since coming into office, the first being the introduction of the market studies power. The third will be the misuse of market power and an amendment to section 36 of the Commerce Act.

This Government supports honest business. We are committed to growing an economy that works for all New Zealanders. This bill delivers on that by introducing a new criminal offence for serious cartel conduct that harms New Zealand business, consumers, and the productivity of the economy. Cartel conduct involves agreements being made between competitors to fix prices, restrict output, and allocate markets. Such conduct can cause significant harm to ordinary New Zealanders and businesses operating honestly. Cartel conduct is currently subject to a civil penalty regime under the Commerce Act. The civil regime has worked well, and I consider it will continue to do so. However, we need an extra level of sanction to ensure that the most serious cartel conduct is deterred and detected effectively. The civil regime will remain the primary option for prosecuting breaches of New Zealand’s cartel prohibition.

I’ve heard concerns about the chilling effect this bill will have. I want to address this concern again. Firstly, nothing in this bill extends what is currently unlawful. All this bill does is add a different sanction on top of the civil regime, for serious cases. The exemptions to the Commerce Act that protect pro-competitive conduct will also apply to the criminal offence. This provides for businesses engaged in collaborative activities, joint buying arrangements, and vertical supply contracts. To complement this, a new defence will apply to those who have made a reasonable mistake of fact in relation to the application of the exceptions. There is a two-year transitional period before the criminal offence will come into effect. This will allow businesses to assess their conduct to ensure that their conduct isn’t caught by the criminal offence provisions. If they are acting lawfully now, they have no need to worry about the criminal regime.

This period of time will also allow the Commerce Commission and Crown Law to make preparations for the detection and prosecution of the offences. I also expect that the Commerce Commission will issue guidance on how it will approach the selection of cases for criminal prosecution. Businesses that wish to ensure that their collaborative activities are lawful can apply to the Commerce Commission for clearance. This will allow those who have self-assessed and found their conduct to be on the line to come in for formal assessment of their conduct if they wish. I believe that most businesses will be able to self-assess and assure themselves that their conduct is lawful.

The commission has published extensive guidance in this area and this should be the first port of call for businesses that are self-assessing. Honest business should not be concerned. I am confident the introduction of criminalising cartels has sufficient provisions to ensure legitimate business practices won’t be penalised while at the same time sending strong disincentives for cartel conduct.

I said at the start of the speech that this was the second legislative step taken by this Government. The first was the Commerce Amendment Act that was passed late last year, empowering the Commerce Commission to undertake market studies. The Commerce Commission is hard at work at its first market study into retail fuel, and I look forward to receiving their final report by the end of the year. The third step in our reform programme is amending section 36 of the Commerce Act, dealing with the misuse of substantial market power. The Ministry of Business, Innovation and Employment is consulting on these reforms. I’ve made it clear in the past that I do not consider that section 36 is working effectively to protect competition. The consultation is currently open and I encourage all interested parties to make their views known.

This trifecta of legislative reforms to New Zealand’s competition law will ensure our markets are operating efficiently, business confidence is high, and regulatory settings are well managed. As the Minister of Commerce and Consumer Affairs’ colleague, I am pleased to be part of a Government who is bringing back the criminal offence for cartel behaviour. The previous Government did a U-turn on it at the last minute and removed it.

I know that deep down the members opposite support this bill, as they’ve said so previously, before their last commerce Minister reversed their own policy. In fact, I quote the Hon Craig Foss, then the Minister of Commerce, “Effective competition enables and drives innovation and productivity. In contrast, anti-competitive conduct, including hard-core cartel conduct, lifts prices above competitive levels to the detriment of consumers.” Oh how this House misses the Hon Craig Foss.

I’m aware also that Simon O’Connor, the honourable member, said this at one point: “This [criminalisation of cartels] is ultimately a bill at the heart of what the National Party believes is a way forward for our economy.” And the honourable member Brett Hudson also said, “I am delighted with this bill. It is clearly taking on the evils, the worries, and the concerns around hard-core cartel behaviour,”.

The bill we are here for today—[Interruption] I’m trying to truncate the speech process by speaking for members opposite, but the bill we are here for today will enhance the effectiveness of New Zealand’s competition law and will ensure that cartel conduct that is intentional and harms competition is subject to criminal sanctions. I believe that this will act as a strong deterrent against cartel conduct while providing certainty for businesses so that they can conduct lawful business with ease. As I said at the beginning, this Government supports honest business. I commend this bill to the House.

Thank you, Madam Assistant Speaker. I rise in Opposition to this Commerce (Criminalisation of Cartels) Amendment Bill in its third reading. As the Minister’s colleague, Andrew Little, has just spoken, I would like to thank him, actually, for drawing upon quotes from previous National Ministers and National members of the Government caucus. Those quotes show quite clearly that we oppose the sort of cartel behaviour that places absolutely unnecessary burdens, horrible burdens, on consumers, raises prices, and actually creates a very, very unfair environment for those consumers and other businesses to exist in. The difference between us in Government and the current Government is that we showed we were prepared to listen—to listen to people, listen to submitters, listen to businesses, listen to officials, and determine and decide that the criminalisation provisions were wrong and should be removed. So we did so, but we enacted legislation that absolutely introduced harsh civil penalties for cartel behaviour. That is the law today, and it is sufficient to deter that sort of behaviour.

This Government instead has gone ahead with provisions that are not only unnecessary from a deterrent perspective but will add uncertainty and issues around the management of commerce in that area. They know this, and we know this, because their officials told them so. Treasury told them, “We’re not in favour of criminalisation”—told them that. Their own officials overseeing the bill came to realise this, through the process of this bill moving through its stages in the House, and came to the Minister with Supplementary Order Paper (SOP) 194, introduced in the committee of the whole House. The SOP acknowledged that the criminalisation provisions could, and very possibly would, lead to situations where activities that did not possess criminal intent would be captured by the criminalisation provisions and we’d have, therefore, fundamentally innocent business people being criminalised just because of the Government’s desire, their unceasing desire—they, basically, don’t like business, over there, despite what they say. They see them as bad people with evil intent, and they just want to take any option and opportunity to crush them. Their own officials told them that their bill would create very poor consequences and wouldn’t deliver to the intent that they had expressed it should. So they had to introduce this SOP. So for the Minister now to tell us that it’ll all be fine and people that shouldn’t be captured by this won’t be—I think he doesn’t understand the kludge that was put together in the SOP in the committee of the whole House, because, in the detail of that SOP, the officials acknowledged that none of the options they put forward were particularly elegant or wholly effective, but basically their advice was, “Of these bad options, this is the least worst. So please do this one.”, which the Minister responsible for the bill elected to do, clearly with that advice.

We’ve got a bill going through its third reading which even officials acknowledge is sub-optimal, but we’d argue more than that, that the bill itself isn’t required at all. The civil penalties that exist today for cartel behaviour are a sufficient deterrent to ensure that consumers and otherwise at-risk businesses in our commercial market have sufficient protection that the sort of cartel behaviour is less likely to happen than it was before the last National Government. This bill is just an illustration that this Government dislikes business and wants to beat them with a large hammer. We oppose the bill.

Thanks, Madam Assistant Speaker, for the opportunity to stand and take a call. I’m actually very pleased to take a call in extreme support of this—

💬 Hon Members: Extreme support!

—of absolute support of this piece of legislation. I find it quite interesting that the member who has just taken his seat—

💬 Kieran McAnulty: What’s his name?

I can’t recall. I’m so sorry. I’m not sure if it’s that much of a big deal, but anyway, he’s just taken his seat. He said that he was pleased that the Minister had quoted previous Government members and that it showed that they opposed the ideal of cartels, but they did not make it a criminal offence. Actually, I’d just like to go on and just quote a little bit more from Mr Brett Hudson when he said, “it does address the negatives of cartel behaviour, and it is important that it does so, because if we 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.” This just goes to reiterate what the Minister said: that this Government supports honest business. We know that cartels cause harm—absolute harm—and it’s very hard to detect cartels, because they often conduct in secret so it’s very hard to detect them. Making it a criminal offence is certainly going to deter this type of behaviour, and we actually owe it to our consumers as well as our honest businesses, because cartel behaviour is unfair to consumers also.

💬 Hon Jacqui Dean: Really?

Yes, yes, really, Mrs Dean—really, really, absolutely. So when people engage in cartel behaviour, they increase their own profits, but it is the consumer that misses out. So we are committed to implementing this reform. There is absolutely no place in New Zealand for cartel behaviour and, on that note, I absolutely commend this bill to the House.

💬 Hon Jacqui Dean: Madam Chair?

I call the Hon Jacqui Dean.

Thank you, Madam Assistant Speaker, I should say—apologies. I’m at a slight loss for words after that last speech.

💬 Hon David Bennett: It wasn’t a speech—it wasn’t a speech.

Well, yeah. We are very clear, and we were very clear when we were in Government. Ministers of consumer affairs and of commerce had the opportunity to listen to feedback around the criminalisation of cartel behaviour, and after a fairly robust and lengthy period of reflection, it was determined, while I was in that position, that the civil regime of penalties against cartel behaviour was in fact working well. Under the civil regime, there can be penalties of some millions of dollars. In fact, there are penalties that have been awarded against cartel behaviour against New Zealand companies, and I think I would be fairly safe in saying that a penalty of some millions of dollars has just got to hurt. As a distinct disincentive and as a strong signal against cartel behaviour, anti-competitive behaviour, it is our belief and our position that the civil regime, in fact, has been, and is, very effective.

Treasury gave a view that was not in favour of criminalisation; it concluded, in fact, that the civil cartel regime appeared to be working well. So where’s the problem? Where is the problem that this Government felt they needed to fix? Can I be so bold as to say: was it that in the commerce and consumer affairs space, which was left in such good shape, they felt they had to do something, so they cast around in some old papers and went, “I know. I know what we’ll do. We’ll reintroduce criminalisation for cartel behaviour.”? Not a good policy position, in my contention, because it does not address a problem which does not exist. That is our position—

💬 Brett Hudson: It’s not broken, so they’re going to fix it.

Exactly. As the chair of the Economic Development, Science and Innovation Committee, Brett Hudson, quite rightly points out, there is no problem that needed fixing, except for the fact that the new Labour-led coalition Government needed to come up with some more work to bring to the House. This was an easy picking. The anti-business position that this Government currently holds is now expressed again. Quite frequently, we discuss other anti-business measures that this Government has brought in. They do see business as the enemy, and this is just the latest version of that philosophy and ideology—[Interruption]

ASSISTANT SPEAKER (Poto Williams): Order! Order! Members, please do not have a conversation across the chamber. I apologise to you, the Hon Jacqui Dean.

I wasn’t listening to the conversation, because it’s not worth listening to; neither is their position around criminalisation.

I want to just give one example of cartel behaviour which was not of criminal intent, and it is a case study that I’m aware of, and it is around an online tyre dealership arrangement where there was a young guy who had an online tyre dealership business, and there was a mate in another city who also had an online tyre dealership business. They had a conversation between them and said, you know, in fact, they indulged in cartel behaviour. They fixed the price of their product. The former I was talking about sort of woke up in the middle of the night, perhaps, and thought, “What have I done? What have I done? What have I done?” and went to his lawyer. His lawyer contacted the Commerce Commission, and this man turned himself over to the Commerce Commission, who, literally, came down on him like a ton of bricks.

It was a very unpleasant—very unpleasant—experience for both of these business people. They were the subject, I believe, of penalty, and certainly the subject of a lot of deserved unwelcome attention, because it was cartel behaviour; it was. It was done more out of ignorance, which is no excuse, but one would be hard put to convince the court, or the Commerce Commission, that there was criminal intent; there wasn’t. The intent there was stupid, the intent was unwise, the intent was unlawful, and all of those adjectives, but it wasn’t criminal. So to bring in criminality into cartel behaviour where there was a lack of criminal intent is one thing, but my main point is that the civil regime is working. Thank you, Madam Assistant Speaker.

Thank you, Madam Assistant Speaker, for the opportunity to speak to this refined and excellent piece of legislation. Mr Hudson spoke to the House about officials recommending against it, and what he failed to mention is that the Treasury report spoke about Treasury weighing up the cost-benefit analysis of prosecution around the issue and the nature—the very problem with cartels is the secretive nature of them and finding them. So Treasury asked, “Well, you know, what’s the benefit there if we can’t find them?” Well, actually, when we find them, and when we know someone intended to collude and act to take from the consumer in a way that increases their profits in collusion with other businesses, then, yes, we must act.

For the previous speaker, Jacqui Dean, who spoke about the civil regime currently working, I put it to her that she read the legislation and note that the civil regime will continue in parallel to the criminal process that is being reintroduced to this legislation. What we are trying to do here, what National was trying to do in their time, was work towards and acknowledge the fact that, unfortunately, New Zealand is an economy of a size and a scale where competition doesn’t exist in the volume that we would like because we know, with simple economics, that good competition means good prices for the consumers.

What we have to be really careful of here in New Zealand, and pay great attention to—and kudos to the Commerce Commission over time and now—is that we do exactly that. What has been introduced here is the ability for this Government, through this legislation, to drill down and ask the question of individuals, not just business: was there intent? Was there an intent to, essentially, steal from New Zealand consumers through the means of collusion with those who should be determined as actual competition? What we also did in this legislation was make it clear that businesses cooperating and working together is actually to be encouraged, because—and when they can prove that it is to the benefit of the end consumer—there are examples of businesses working together where you might instinctively think, “Well, hold on. We don’t want them to do that. We’ve just been told about cartels.” But, actually, there are many instances where good businesses seek to work together to create efficiencies in costs, for example—production costs, delivery costs, end costs to the consumer, and, in so doing, the price to the consumer is actually decreased and the value for money is so much better.

Now, this legislation outlines that—makes it clear that where two companies or more can prove that that is what they intend to do, and that is their undertaking, by all means do so, and do not fear confusion of behaviour and cartel behaviour. In fact, please do more of it when we know it is benefitting New Zealand consumers. So it not only reintroduced the criminalisation aspect but because we acknowledged the concerns around adding that component to this legislation, we sought to make it clearer when that provision came into effect.

So it is actually with a great deal of pride that I stand and support this bill. I would also add, and it hasn’t been spoken about by those opposite, that in the international area of cartel behaviour, in the enforcement of it, by introducing this legislation, New Zealand will come into equivalence with most of our trading partners around the world who use the criminalisation aspect to enforce legislation in their own economic precincts. So what we are doing is coming into line with best practice around the world. We are making it clear to good businesses: please continue to be good businesses and work together, but if there are individuals out there within businesses who know that what they’re doing is wrong, in colluding with what should be the competition and creating that cartel environment, then they will be prosecuted, and they will be held personally liable. I think, from memory, the penalties are $500,000 or seven years’ imprisonment, or both.

Now, if you know that going in, when you’re making some hard decisions about how you’re going to operate your business, you’re getting pretty clear signals from this Government about what we absolutely do not expect or want from New Zealand businesses, because, in the end, this is a Government that wants to ensure good competition, healthy competition, that looks after the New Zealand consumer in all parts of their lives. So this is a very good piece of legislation, and I wholeheartedly recommend it to the House. Thank you.

Thank you, Madam Assistant Speaker. I stand in opposition to this bill. One of the things that the member who just took his seat, Fletcher Tabuteau, actually talked about was in terms of promoting competition. Well, that is the question. You know, we have to actually understand: does the cartel regime promote competition in the long-term interests of consumers? Does it in fact do that, promote competition? Because competition is a good thing, but the thing is that this cartel criminalisation regime will actually have a chilling effect on competition. For example, joint bids for contract could be deemed a cartel behaviour. It could be anti-competitive or pro-competitive depending on the perspective of the person who actually looks at it.

💬 Brett Hudson: Anti-business.

It is very anti-business, thank you, Mr Hudson. I totally agree with Mr Hudson that this bill is actually anti-business. The earlier example that the Hon Jacqui Dean gave was a mistake by a business who was trying to promote his business online to sell a particular product, but he was deemed a cartel.

When you actually think about the word “cartel”, often you think about things like a drug cartel, you think about some sort of a criminal conglomerate, but the thing is that, with this statutory definition that we currently have, cartels are currently regulated. The kind of behaviour we’re talking about is price fixing, and often price fixing happens in a business that is trying to do a sale, for example. McDonald’s up and down the country will be fixing a particular price for a particular event, for example—that could be considered price fixing. Restricting outputs and allocating markets—these are currently regulated. Cartel conduct is a civil offence.

Recently, there was an award made by the Commerce Commission of $7.5 million against a body corporate that was found to have acted in a sort of cartel behaviour, and an individual was fined $100,000 and not allowed to be in a management position for five years. That is a civil regime that is working, I would have thought—$7.5 million that a body corporate has to pay I would have thought was a huge deterrent for any body corporate to act in a cartel-like behaviour. These civil deterrents—the way that the National Government has put in place the civil regime—are actually working. This cartel criminalisation is actually—I’ve just learnt this terminology—a sledgehammer cracking open a walnut. This will not work.

Thank you, Madam Assistant Speaker. The Greens are happy to join the other parties on this side of the House to in fact celebrate this piece of legislation that’s been a really, really long time coming. I understand that the legislation first came into the House to criminalise cartel behaviour in business in this country in 2011, introduced by the then National Party Minister the Hon Craig Foss, and that was in recognition that cartels are economically damaging and that criminalisation of that behaviour would lead to a higher duty of care by company directors and protection for the interests of consumers in New Zealand.

Now, for people who may not be, like, incredibly over the language of this and these kinds of ideas, a cartel conduct is agreements between rivals to lessen competition between them, and it includes agreements to fix prices or restrict output or allocate markets. So I think, in terms of just linking back to the previous speaker, Melissa Lee, the point that’s significant is “between rivals” to make agreements around fixing prices, not internal pricing decisions of companies. So that is one point.

I would also say that the idea that this will have a chilling effect on competition also seems strange when this criminalisation of cartel behaviour is recommended by the OECD and is in place in many countries around the world. We’re actually quite far behind other countries like Australia, the US, Canada, the UK, Japan, Ireland, and Korea. They’ve all already criminalised cartel behaviour. So, finally, now we are in 2019, after the first attempt to do this by the National Government started in 2011, and I’m sure many more countries have actually caught up with what the OECD’s been recommending.

So it’s good, good, good that New Zealand is finally getting to the point of doing this, because we know that New Zealanders lose out when we don’t have a strong prevention regime in this area. I do acknowledge that the previous Government did manage to strengthen the penalty regime, because what they had back then was a pretty low fines structure, and even, I think, the first case of using the legislation resulted in a $5 fine for the businesses who were found guilty of price fixing.

But we know that, actually, there needs to be a disincentive and that the best practice is to criminalise the behaviour. I think it really is an issue of a form of white-collar crime, because it is looking to maximise the profit for businesses at the expense of New Zealanders. I think it’s fair that this House criminalise that behaviour, as is best practice internationally, and so the Greens are very happy to support this.

Thank you, Madam Assistant Speaker. I sat on the Economic Development, Science and Innovation Committee that considered this bill, and I went into it with quite an open mind, but two particular issues really stood out for me during the process that we went through when meeting with officials and also discussing it with submitters. The first one is the chilling effect that this bill would have on well-intentioned individuals and well-intentioned businesses, and the second point that really came out was just in relation to the very substantial regime that’s already in place for civil proceedings.

I listened with interest to the previous member, Jan Logie, and she mentioned some of the low fines that have been handed out. Well, I’ll just read for that member some of the evidence that was presented to the select committee, which is that “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.”—they have never been imposed, the maximum penalties.

So I ask the Government what is the problem that they are trying to fix? If their concern is that there aren’t substantial penalties, well, you just have to look to the courts and see that the maximum fines have never been handed out to anyone. So that’s where the problem lies, not with the legislation. It’s never been handed out; so we don’t believe that this bill is necessary, and we won’t be supporting it on that basis.

I understand that this is a split call. Kieran McAnulty—five minutes.

Oh, do I only get five minutes, Madam Assistant Speaker? That is bitterly disappointing. Oh, I probably won’t use them, because it’s a great bill and there’s no point in going on and on about that on a Thursday afternoon.

This is a marvellous bill, and another example of this Government doing what needs to be done and doing what the previous Government didn’t have the courage to do, because, of course, they had the opportunity. The previous Government brought to the House criminalisation provisions in their own bill, and they chickened out. They chickened out, for whatever reason. They’ve had the opportunity to explain it, and I don’t think they’ve done so adequately. They had the opportunity to bring in these provisions, and they pulled them out.

I believe it was the Hon Paul Goldsmith. He became the Minister of Commerce, and I believe he took over from the Hon Craig Foss. Now, that was a top bloke. The old Craig Foss—bring back “Fossie”. So Paul Goldsmith came in and he took them out through a Supplementary Order Paper, and it seems they failed to recognise that Australia, Canada, the United States, and the UK—our main trading partners—had criminalised cartel behaviour because cartel behaviour is quite outrageous, really, when you think about it. You’ve got price fixing. That’s the sort of behaviour that not only consumers but also businesses do not want to see in a market, and it’s about time that we had a progressive Government that came in and actually took a stand on these sorts of things.

I note, but I won’t go through, the long, long list of quotes that I have written down here from the Hon Craig Foss, from Simon O’Connor, from Brett Hudson, and from the former Minister of Commerce the Hon Jacqui Dean, all of whom at various times, when discussing the criminalisation of cartels, were in favour of doing so. Now, when they’re in Opposition and it’s this Government that’s bringing it forward, they don’t like it. I think it’s another example of when it’s their idea, they like it, but when it’s our idea, they don’t. What a shame. I’ve got no hesitation in commending this bill to the House.

I just want to acknowledge Kieran McAnulty, that last speaker on the other side there—that was very passionate. Unfortunately, the claims, the evidence, and the facts just don’t stack up, but I can tell that member one thing: there will be a criminal cartel between the Labour Party and the National Party this weekend at the parliamentary rugby game, as that member and I are both playing.

If you look at the facts and if you look at the submissions, we had 20 people submit, including Business New Zealand, the Franchise Association of New Zealand, Horticulture New Zealand, and the Institute of Directors. Not all of them opposed this bill. Eleven were opposed and nine were in support, but most of those nine in support did support criminalisation only in some circumstances. Just a couple of them: submitters who opposed the bill said there was no evidence of a problem here with the current regime, and Andrew Falloon, the MP for Rangitata, made some very good points. They were concerned that criminalisation would have a chilling effect on competition and business, and for that fact, National does not support the bill.

I’m delighted to stand here this afternoon and speak in favour of this bill. I am delighted to have followed so many good speakers on this side of the House and on our Government benches, who have been an absolute positive strength to this bill. I think it is a great bill.

It is not one, as I’ve stood here and said before, that I’ve actually sat on the select committee of, but I remember sitting in the committee of the whole House being absolutely fascinated at the arguments that were being put forward. I reiterate that this bill is an important element in this Government’s reform programme, and it strengthens New Zealand’s competition law, in line with some of our major trading partners.

I’m not sure why the Opposition don’t understand that. Internationally, most of our trading partners have criminalised cartel conduct. Let me read some of those out: Australia, Canada, the United States, and the UK—all very, very important trading partners. The fact that we are bringing this regime in now is something, as my colleague, Mr McAnulty has previously said, that the previous Government just didn’t have the confidence, I guess, to do. I’m not sure, they had said—they chickened out.

💬 Greg O’Connor: Your own mates were going to jail.

ASSISTANT SPEAKER (Poto Williams): Order! Order! Mr O’Connor, not appropriate.

Bringing this particular piece of legislation in means that we will see greater collaboration with other jurisdictions. We know that cartels can cross borders; we understand that. This means that aligning our laws with those in other jurisdictions will allow the Commerce Commission to participate more fully in international cartel investigations. It’s not hard to understand that. On that case, I have no hesitation in supporting this bill and commending it to the House.

It’s getting late in the day, but I think the real issue we’re dealing with here is whether, in fact, adding a criminal element to the existing legislation will make any difference whatsoever. We can hear about other countries—we can hear about that—but I’m yet to hear in a speech or through any of the select committee material of an example in New Zealand where criminalisation would have made a difference or where it couldn’t be dealt with under the civil proceedings.

So what this is going to do, yet again—and this new Government is very good at doing this. When you go to do something, you have another tick-box exercise and you ask another lawyer, another accountant, or another business analyst “Can you check out this? Can you check out this before I go and buy that company or expand into another region, because how this might work could come back to bite me?” I think we, as New Zealanders, don’t always have to follow what other countries are doing, particularly if our culture is different and particularly if there is no discernible risk, and I haven’t seen any of that explained throughout this whole process. So we have a civil proceedings arrangement. It has substantial fines, as Mr Falloon, my colleague, said previously, that have never been fully used.

Then I listened to the Hon Andrew Little, who talked about the consumers being ripped off by cartels. You name those organisations where, by sending somebody to jail, it would have made any difference and where that can’t be dealt with under the civil proceedings regime.

So we don’t support the bill. On this side of the House, we actually don’t like cartels, but, fundamentally, we see no value whatsoever in criminalising the behaviour, nor, throughout this whole process, have we been shown any examples of where putting somebody in jail in a criminal way would have made any difference to that behaviour. So we can’t support this bill on that basis.

This is a bill that really stands New Zealand apart as a very fair country. I think those of us who’ve watched different regimes around the world—we start, I suppose, with communism—I think we all agree there was no competition. The State ran everything; it was pretty much a failure. But look at the other side, where perhaps most of our ancestors came from. Many of our ancestors came from Victorian England—the place was one big cartel. Look at the United States: the necessity for the anti-trust bills—the Sherman Antitrust Act of 1890. That was what happened when you actually had cartels. In fact, the biggest losers were farmers. The biggest people who pushed that legislation in the United States were actually farmers, because the result of those massive cartels over there brought about the antitrust.

New Zealand’s a very fair country; we’re a very balanced country, and I think, as we’re seeing, the world is looking at New Zealand as a country that generally gets it right. So this is about making sure that we do have that fair environment; that we get the balance right between what is competitive behaviour and what is too much State interference, and I think this is actually getting it about right.

One of the questions asked by the previous speaker, Lawrence Yule, was: where does this make a difference? Many of them, presumably, have sat on boards, and as we all know—and we’ve seen many of the criminal cases; many of the cases where organisations have gone broke, for want of a better word—when they’ve been dissected, often it’s one individual. Often it’s the CEO; it may be the chairman of the board. Those decisions are made and many of the directors have probably been relatively unfairly treated. They have been dragged into this. When it’s actually been dissected, it’s often been one individual or two individuals who have actually dragged the organisation into the position they’ve found themselves in.

This is where the criminality comes in. Those people go; they can be sacked. The company and shareholders of the company will have to pay the fines. But this way it ensures that those who are sitting around that board table, those who are advising the board, those who are sitting around making these decisions will just look over their shoulder and think, “Actually, it’s not only a sacking in this, it’s not only a bit of reputational damage; I may end up in Rimutaka Prison.” I suspect that’s probably why, after all those magnificent speeches by those opposite, when the criminal provisions were being considered and agreed with, it was pulled at the last minute. I suspect there were those who were afraid that it would be—those who would go to jail, those that would end up sitting in Rimutaka, where they belonged, were afraid that that would actually happen.

So that is why having a criminal element to this is actually essential. It means there are some things you simply cannot walk away from. I commend this bill.