Air NZ seeks cartel gagging order repeal

Photo / Sarah Ivey

Air New Zealand is seeking a precedent-setting ruling to overturn "draconian" gagging orders on staff imposed by the Commerce Commission during air freight cartel investigations.

The airline's lawyers yesterday argued it can't defend itself against collusion accusations if it can't talk to current or former staff about commission interviews.

The commission started action against Air New Zealand and 12 other airlines late last year alleging cartel activity which the commission says could have cost customers $600 million.

Air New Zealand is fighting those charges and in the meantime wants a stay of proceedings until secrecy orders imposed under Section 100 are discharged.

In the High Court at Auckland Alan Galbraith, QC, said the blanket gagging orders were designed to protect third parties supplying information to the commission, not prevent employees talking to their company. Anyone breaching the orders, which cover both questions and answers during an interview, can face prosecution.

Air New Zealand was entitled to full and frank information from employees in light of the "opaque" allegations against it, he said.

Interviews of 13 staff had been conducted months ago, the statements had been sworn and, given the email trail, there was little prospect of history being rewritten.

The orders prevented staff from giving the airline practical advice on how it could respond to the commission's investigators. Once the investigation had moved to litigation the orders should be dropped, he said.

The commission was using the "draconian" orders more often for tactical advantage rather than in the spirit in which they were intended.

Galbraith said overuse of the orders was an issue that had been of considerable concern for the past five years.

The orders exceeded powers given to police during criminal investigations and were also available to the Securities Commission.

While business groups had supported their introduction in the 1980s, that was based on protection of third parties and the integrity of that evidence. Galbraith said there were freedom of expression issues under the Bill of Rights Act that could apply in this case.

Three airlines were already seeking leniency deals by providing information to the commission, he said. Air New Zealand had also provided thousands of documents but along with most others facing action, was fighting the case.

The commission is due to detail its response today.

It has previously said Section 100 was important to prevent the targets of its cartel investigations tipping each other off as to the commission's likely lines of inquiry following an interview.

TOUGH LINE
* Section 100 of the Commerce Act covers any information or document or evidence and applies to information given to and obtained by the Commerce Commission.
* This month the commission said details of a cellphone pricing deal were covered by the section and it warned media against publishing them.
* Fines for breaching the act range from $4000 to $12,000.