New Zealand's first cartel conduct criminal case: Construction company director pleads not guilty

Judge Claire Ryan at Auckland District Court.
Judge Claire Ryan at Auckland District Court. Photo credit: Newshub

One of the directors of two construction companies facing criminal charges of cartel conduct has pleaded not guilty at the Auckland District Court.  

The other company director's lawyer sought more time before his client enters a plea, which was granted by Judge Claire Ryan. The defendant will enter his plea on March 14. 

The charges were laid in December last year by the Commerce Commission. They're believed to be the first-ever criminal charges for cartel conduct in New Zealand since the law was changed in 2021.  

The two construction companies and their directors are accused of colluding to rig bids for infrastructure projects in Auckland. 

Both companies and their directors were granted interim name suppression by Judge Ryan on Thursday. It was their first court appearance since the charges were laid.  

A 'cartel' is defined as two or more businesses agreeing not to compete, which includes bid rigging. For example, two companies could agree that, if one makes an inflated bid for a project, the other could make a slightly lower offer, and potentially win it with a higher margin. The favour could then be reciprocated at the next opportunity.  

Under the Commerce Act, individuals can face fines of up to $500,000 and up to seven years behind bars if found guilty of being part of a cartel.

Commerce Commission chair John Small said on Thursday that cartel conduct is not fair on other businesses trying to compete fairly. 

"The criminalisation of cartel conduct in 2021 underlines just how serious and harmful this offending is," Small told Newshub.  

"Bid rigging of publicly funded construction contracts loads extra costs onto taxpayers and the New Zealand economy as conduct of this type undermines fair competition.  

"The commission will not hesitate to bring criminal proceedings in appropriate cases to ensure Kiwis are getting the benefits of fair prices, quality services and more choice." 

Alan Pollard, chief executive of Civil Contractors New Zealand, said he hopes the charges send a warning to other businesses that cartel conduct won't be tolerated.  

"What makes the contract industry work so well is having a fully competitive, commercially focused industry that creates opportunities for all contractors, and if you have one or two colluding together to exclude others, that's clearly an issue around free market," he told Newshub.  

"For clients, they want to have confidence that the prices or bids that they're receiving for projects are of fair value because it can influence ultimately - for councils, for example - what ratepayers are paying for the work."

The defendant who pleaded not guilty will next apepar at the Auckland District Court on April 26 for a case review.