Immunity offer for cartel whistleblowers

Cartel insiders who blow the whistle to the Commerce Commission are being offered immunity under a new leniency policy.

The policy is intended to be the carrot that accompanies the stick of tougher penalties for anti-competitive behaviour, enacted three years ago.

Commission chairwoman Paula Rebstock said the policy was intended to encourage a race to be the first to report , as well as to create tension and distrust among members of a cartel.

"Cartels are by their nature difficult to detect, involving secretive, collusive behaviour such as price fixing or market rigging," she said.

Competition watchdogs overseas had found that offering immunity as an incentive on cartel members to break ranks was critical to the enforcement of competition law.

Rebstock said investigations such as those into Toyota dealerships, vitamins, petrol companies and most recently ophthalmologists would have benefited significantly if such a clear-cut policy had been in place.

Commission general manager Geoff Thorn said it had already been approached by three people seeking immunity. In one case, it had decided there was no breach of the law. The other two were still under investigation.

The commission can only promise immunity from legal action it might have taken. It cannot prevent injured third parties from invoking the Commerce Act, although such actions are rare.

Immunity is only on offer for the first to tell the commission of a cartel. That could be an individual or a company, in which case it could extend to any present or former director, officer or employee of the company.

But if the commission is already investigating, it is too late.

Thorn said the second or even third person who co-operated might qualify for easier treatment under the commission's existing leniency policy, which applies not only to the Commerce Act but the Fair Trading Act and other legislation the commission enforces.

It has discretion to take a lower level of enforcement action or even no action and is more likely to do so if individuals or firms are prepared to pay compensation to injured parties, stop the illegal behaviour immediately and put in place programmes to ensure compliance with the law.

It is less likely to go easy on the individuals or firms that forced or encouraged others to break the law.

Cartel conduct includes price fixing, excluding competitors, collusive tendering, bid rigging, production or sales quotas and market sharing.

The commission has also spelled out the procedures for using the cease-and-desist powers given to it when the Commerce Act was amended three years ago.

The provisions, never yet used, are intended to ensure anti-competitive behaviour is stopped faster than by using the normal litigation process, which can take many years.