New Zealand freight forwarders penalised for cartel agreements
17 / 06 / 2022
By Rebecca Jeffrey
New Zealand’s High Court has imposed penalties totalling over NZ$9.7m on two international freight forwarding companies, Mondiale Freight Services Limited and Oceanbridge Shipping Limited, and on four individuals associated with the companies, for engaging in longstanding cartel agreements with their competitors.
Air Cargo News first reported on the legal proceedings in December 2021.
In a statement on June 17, the New Zealand Commerce Commission said it had previously filed proceedings against the defendants alleging that they each breached the Commerce Act by agreeing with other freight forwarders not to compete for customers. Auckland-based Mondiale and Oceanbridge, also Auckland-based, were in separate cartels and did not enter into cartel agreements with each other, said the Commission.
The separate cartel agreements were reached prior to the COVID-19 pandemic, according to the Commerce Commission.
The High Court imposed penalties of NZ$4.9m on Mondiale and NZ$4.6m on Oceanbridge. The four individuals associated with the companies received penalties ranging from NZ$65,000 to NZ$100,000.
Commission Chair Anna Rawlings said: “These cartel arrangements had the effect of removing competition, making it possible that customers were charged more by counterparties for retail freight forwarding services than they would have been if Oceanbridge and Mondiale had actively competed for those customers.”
The High Court acknowledged that the cartel conduct arose from practical concerns held by Mondiale and Oceanbridge regarding providing wholesale freight forwarding services to other freight forwarders while also being their competitors. However, the Court found that the cartel conduct was a serious breach of the Act, engaged in and endorsed by persons at the highest levels of both companies, and occurred over a number of years.
Ray Meade, Mondiale’s chief executive, said in a media release: “We have cooperated with the Commerce Commission from the outset. We understand the need to meet all our obligations under the Commerce Act, and we are sorry this did not happen in this case.
“Since this matter was first brought to our attention in 2018 we have moved quickly to review and strengthen comprehensive compliance practices across all our operations.”
Mondiale said High Court Justice Wylie found that Mondiale had not been aware it was in breach of the Commerce Act at the time of the practice and the company had held the view it was acting ethically in order to respect the trust and confidence of its wholesale freight forwarder customers.
According to the company, Justice Wylie said Mondiale had seen the practice as a practical response to the need to provide wholesale freight forwarding services to other freight forwarders while also being their competitors.
Justice Wylie also said Mondiale had settled with the Commission at the earliest possible opportunity and that the conduct had stopped immediately in 2018 when Mondiale was informed of the potential issue.
Meade said the company had acted quickly in 2018 to make changes as soon as possible to its practices to reflect best practice and entered into a settlement as soon as it could to resolve the matter on terms acceptable to Mondiale and the Commission.
“We have a focus on compliance and an ongoing extensive programme of competition law training to ensure we are all aware of our obligations and fully comply with all requirements right across our organisation,” he said.