Adding value to clients & limiting PI claims – Commerce Act “must-knows” for normal lawyers

This is for you!

Competition law might seem a geek area, best left to a few pointy heads in big firms. 

Andy Matthews

But increasing penalties, recent enforcement action, a focus on individuals and risks of PI claims indicate otherwise. In fact, competition law catches large and small businesses.

The breadth of competition law, including the range of conduct caught by the “per se” prohibitions (notably the surprisingly broad “price-fixing” prohibition), means all practitioners should have a good working knowledge of the basics.

In particular, they must be able to spot the risk areas and “non-intuitive” areas. A recent judgment noted:

“The … companies obtained legal advice which was to the effect that there was no obstacle to the … agreement in terms of legal liability. The advice did not, however, refer to s 30 of the Commerce Act [i.e. the price fixing prohibition].” (emphasis added)

“463 investigations – $30.2 million in penalties and compensation” … in one year

The Commerce Commission’s November stakeholders’ briefing highlighted 463 investigations, resulting in penalties and compensation exceeding $30 million, for 2014/2015.

Corporate “price-fixing” penalties over the last 5 years have ranged from almost $0.5million to $7.5 million. The average corporate penalty was over $2.5 million.

Regulators are increasingly targeting individuals. New Zealand is no exception. In the Koppers litigation, one individual had fines and costs of over $100,000 imposed on him. The (no doubt reasonable) legal costs will not have been insignificant. The Act prohibits indemnification for price-fixing.

Potential risk areas, practical advice for lawyers

Distribution arrangements have always been a problematic area, most obviously in franchise and similar arrangements, highlighted in the early 1990s in the Toyota Dealers litigation. The stakes are now much higher, especially in the “online” world.

We will discuss the ramifications of the Australian Flight Centre and ANZ cases for agency and distribution at an upcoming ADLS seminar entitled “Commercial Law Series: Commerce Act – Insights and Guidance” on 30 August 2016.

We will discuss issues we see regularly, providing practical guidance on how to mitigate or avoid risk.

We will highlight the risks in competitor dealings, including legitimate joint ventures and worthy industry associations, covering the Act’s hidden provisions.

We will tell you about the latest thing, “Hub and spoke cartels”, and how “Project Mastermind” led to penalties of AU$18million for Colgate-Palmolive and AU$9 million for Woolworths in the “laundry detergent cartel”.

On the flipside, we will discuss procurement issues. We will touch on restraints, discussing when exclusivity and non-competes can be problematic.

No competition seminar is complete without discussing compliance. We will talk about the Commission’s Leniency Policy (immunity), its excellent plain English guides and how to cost-effectively assist your clients on compliance without boring them to tears.

Andy Matthews is a competition lawyer with nearly 25 years’ experience dealing with regulators in New Zealand, the UK and EU. Before founding Matthews Law, Mr Matthews was a senior partner and head of the NZ Competition & Regulatory, and the telecommunications, media & technology teams at a leading trans-Tasman law firm.

The upcoming ADLS seminar will be jointly presented by Andy Matthews (Principal, Matthews Law) and Katie Rusbatch (Competition Manager, Commerce Commission). 

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