Giltrap fights to reduce penalty for price-fixing

By CHRIS DANIELS

A company should not have to pay a bigger penalty simply because it defends itself against price-fixing charges, says the lawyer for one of Auckland's biggest car dealers.

The High Court at Auckland yesterday heard submissions from the Commerce Commission and Giltrap City about what penalty the company should pay for its involvement in a price-fixing arrangement.

Giltrap City was found by Justice Susan Glazebrook in September to have taken part in a price-fixing arrangement in 1993, when one of its workers took part in a meeting with other Toyota franchise-holders.

The deal, which never went into effect, related to maximum discounts on new cars being sold by the dealers.

In December 1996, seven other Auckland Toyota dealers admitted they broke the law and were ordered to pay $50,000 each.

But Giltrap denied any wrongdoing, and has fought the charges for eight years, including a failed 1998 attempt to take an appeal to the Privy Council in London.

Speaking for the Commerce Commission yesterday, Brendan Brown, QC, said Giltrap should pay a penalty of between $200,000 and $250,000 for breaking the law.

In evidence, Giltrap solicitor Tony Ivanson said that the finances and administration of Giltrap City Toyota were controlled by the parent company, Giltrap Holdings.

Mr Ivanson said that during 1996 and 1997, the commission was trying to get his client to join in a settlement along with all the other car dealers that had admitted liability.

Mr Ivanson said during all discussions, he thought the commission meant to treat Giltrap in exactly the same fashion as all the other dealers - who had been penalised $50,000 and forced to pay $1000 costs.

Warren Gibb, Giltrap group general manager for the Giltrap Group, also said in evidence that he had always thought the commission was proposing to treat it the same as the other dealers.

A commission lawyer had "threatened" the company by saying it would seek a higher penalty if Giltrap did not accept liability in a negotiated settlement.

He was "shocked and flabbergasted" when he heard the commission was to ask for a penalty of between $200,000 and $250,000.

Mr Brown said the $50,000 penalty imposed on the other dealers was a limiting factor in the size of penalty now being sought against Giltrap.

But this $50,000 represented a significant discount to the original defendants for agreeing to admit liability and stop litigation.

Giltrap City Toyota was a mere sales arm of the larger Giltrap group and any penalty would be paid from the larger group's account, so it would have to be a deterrent for them, he said.

When the eight other dealers were penalised $50,000, some were at the "different end of the financial spectrum" from Giltrap.

Speaking for Andrew McKenzie, who was the dealer principal at Giltrap City Toyota at the time of the price-fixing and was also prosecuted by the Commerce Commission, John Billington, QC, argued against any penalty being imposed.

McKenzie had been a salaried employee, unlike the other dealers in the price-fixing arrangement.

Giltrap lawyer Michael Reed, QC, told the court that the commission had acted improperly by threatening his client with a higher penalty if it did not accept liability.

It was unfair to impose a higher penalty on Giltrap simply because it was bigger, when the other defendants, regardless of their relative size, had all been ordered to pay the same.

Giltrap's employee, Mr McKenzie, "had gone on a frolic of his own," becoming part of an arrangement with the other dealers that his bosses would have wanted no part of.

McKenzie had become part of this arrangement only a very short time before he left the Giltrap group to set up as a competitor.

Justice Glazebrook, who is hearing the case, reserved her decision on what penalty Giltrap and McKenzie should face, but indicated it was unlikely to be made before the New Year.

Argument over the awarding of costs is continuing.

Giltrap has already lodged an appeal against Justice Glazebrook's finding that it joined the price-fixing scheme.