Two rural companies settle price-fixing claim

PGG Wrightson and Rural Livestock have agreed to pay $3.2 million in penalties and costs to settle a price-fixing claim in the High Court. Photo / NZME

NZX-listed rural services firm PGG Wrightson and stock and station company Rural Livestock have agreed to pay $3.2 million in penalties and costs after settling price-fixing claims from the introduction of the National Animal Identification Tracing Act 2012.

In separate High Court hearings in Auckland, Wrightson was fined $2.7 million and agreed to pay $50,000 in costs to the Commerce Commission, while Rural Livestock was handed a $475,000 penalty, the regulator said in a statement.

The commission said its investigation found three anti-competitive agreements to set fees under the NAIT act by the members of the New Zealand Stock and Station Agents' Association, including Wrightson and Rural Livestock. Those agreements included fixing the price of tagging cattle at sale yards, increasing yard fee charges, and hiking stock and station agent charges by introducing an administration fee for NAIT-related costs.

"Both companies subsequently admitted their conduct breached the Commerce Act and reached separate settlement agreements with the commission," it said.

In a separate statement, Wrightson said the payment reflected the company's role in "coordinating much of the industry response and planning relating to the implementation of NAIT including errors made in reaching arrangements affecting price in breach of the Commerce Act," and also included a discount for the firm's cooperation with the regulator.

"It was a tough lesson for the business to learn and was especially disappointing given all the good work that was done facilitating the implementation of the NAIT scheme, an 'industry good' initiative", chief executive Mark Dewdney said. "With the benefit of hindsight, more care should have taken in respect of matters relating to the fees imposed when NAIT came into effect."

Penalties for price fixing include the greater of a $10 million fine, or three times the commercial gain, or 10 per cent of the company's turnover if the gain can't be easily established.

This month, Commerce Minister Paul Goldsmith backed down on plans to impose criminal sanctions on the most egregious cartel behaviour after businesses lobbied vigorously to drop the move, deciding civil penalties should suffice.

The commission said proceedings filed against Elders New Zealand and five individuals in August are still before the courts.

The regulator also issued warnings to a number of other livestock companies and the industry body, saying they were likely to have breached the act. Those entities include Allied Farmers, Peter Walsh & Associates, CRT Livestock, LI Redshare, Central Livestock, Hazlett Rural Livestock, Southstock, and the NZ Stock and Station Agents' Association.