Cosgrove Clayton: Commerce (Cartels and Other Matters) Amendment Bill — First Reading 
Text is incorporated into the Bound Volume 
Cosgrove Clayton: Commerce (Cartels and Other Matters) Amendment Bill — First Reading 
[Sitting date: 24 July 2012. Volume:682;Page:3870. Text is incorporated into the Bound Volume.] 
Hon CLAYTON COSGROVE (Labour) 
: 
 Similar to the last piece of legislation the Companies and Limited Partnerships Amendment Bill the Labour Party will support the Commerce (Cartels and Other Matters) Amendment Bill at the very least being referred to the Commerce Committee. We reserve the right—as I said with the last piece of legislation—to examine the detail of the bill. 
I must say from the outset that this legislation is unlike the last piece of legislation we dealt with which had sort of languished around the Order Paper—well it had not even got on the Order Paper I think since the respected Minister of Commerce the former Minister Simon Power had kicked it off. This Minister of Commerce had let it languish to the detriment of our international reputation including as I said in the debate on the last piece of legislation New Zealand being struck off the European Union white list. This legislation has I think at least to a high degree been put together in a far more positive and constructive way in terms of consultation with the industry and with the sector. 
Cartels make markets as we know less competitive and they lower output or increase prices to consumers. They are insidious. There has been activity in respect of cartels within the New Zealand context. There have been cases. For instance in the wood chemicals case in New Zealand the cartel was estimated to have caused an overcharge of $9.7 million over 5 years but at that time—and currently of course—the penalties were wholly inadequate in that the total penalties came to $5.4 million. So it is timely—again for the reasons I outlined in the last piece of legislation—that we are brought into line and that our reputation as a country and as commercial entrepreneurs is managed and carefully protected but more important we are brought into line with other major trading partners such as the US Australia the UK and Canada which have criminal sanction regimes already in place. I think it would be fair to say that the time for this legislation has certainly come. The time for us to get very serious about the detection the process of dealing with it and the penalties associated with that process—getting serious about those—has come indeed. 
Cartels of course can be difficult to detect and to ensure that they are adequately discouraged our view is that substantial criminal sanctions are required. I do note as the Minister did that within the bill the criminal penalties are up to 7 years’ imprisonment three times the commercial gain or 10 percent of the turnover and I believe up to $10 million. These are substantial criminal sanctions for hard-core cartel activity. The bill also helps obviously to promote the deterrence of hard-core cartels while not deterring efficiency or deterring efficient collaborative activity. So it takes nothing away from entities that want to collaborate appropriately. 
Cartels of course as I have said are an illegitimate transfer of wealth from consumers to businesses. This bill will bring us into line as I have said with other countries but especially with Australia which introduced these sanctions as far back as 2009. I suppose without rehearsing arguments again it does beg the question in respect of priorities. I take nothing away from the Government’s process of consulting and having exposure drafts with the industry but I wonder when Australia dealt with this issue in 2009 why we have sort of been dragging the chain on this issue. It is now halfway through 2012 and this bill appears before the House. So I suppose my message to the Minister and the Government would be that the Government sets its own priorities the Government sets it own agenda and we have heard that there is a 120-point plan—or plans; there are so many plans that this Government is running out of paper and ink—but there is a difference between having a plan on a piece of paper and actually implementing it executing that implementation and making it happen. When our biggest trading partner Australia has had legislation in place since 2009 with tough sanctions for hard-core cartel activity I do not think it is incumbent on us to be the junior partner and poor relation and sort of languish for 2 or 3 years until somebody turns their mind to actually introducing a piece of legislation. 
I say to the Minister that obviously there is some bipartisan support for this bill because it is in all our interests in respect of our country to ensure that our commercial and country reputation is protected and enhanced but again I will be asking the Minister—and I am sure the select committee will want to know again—what exactly the priorities are for this Government. This legislation may not turn the lights on for many in the media and it may not be some sort of ruggedly populist activity or populist policy that is going to light up hundreds of thousands or millions of the populace but it is a damned important piece of legislation. I believe and the Labour Party believes that it should have had greater priority than for instance other pieces of legislation we have dealt with like the John Banks regulatory reform bill which was awe-inspiring in its stupidity of repealing 31 Acts that are spent or do not exist. The Government thought that was a greater priority until John Banks came a gutzer of course. I mean he has disappeared without trace like the Invisible Man. But it thought a bill that repealed 31 Acts that basically had no effect on anybody was a greater priority than this piece of legislation and the previous piece of legislation we have dealt with just a few moments ago in this House. 
So you have got to ask of this Minister of Commerce where his priorities and those of his Government lie: 31 Acts that do not exist or this. This is important and if you have been in business—and I know that many members of the House including me have been in business—you know the importance of appropriate competition law and of appropriate regulation that unleash a sort of esprit de corps and spirit of entrepreneurship in this country and also allow our commercial entities to act appropriately and make deals in other jurisdictions knowing there are international safeguards. So if we do not line up if Australia has these institutional requirements and we do not then which is the more attractive market to do business in if you are looking as an international company New Zealand or Australia? I just ask the Minister again where the priorities are where the work programme is and why we have waited so long. 
We know of course that at least 6000 companies from 57 countries have been alleged or proven members of international cartels and that comes from the American Antitrust Institute working paper which has been around for some time. That is international research. So 6000 companies in 57 countries have been alleged or proven members of international cartels. The total known effect of sales by international cartels is some US$16 trillion—US$16 trillion. That is a substantial amount of money and it gives us motivation to get this bill in an appropriate shape to ensure that it is examined in detail and progresses through this Parliament in a timely way. 
The bill as we are aware will apply to some conduct outside New Zealand in order to capture all New Zealand cartels. It will make forming a cartel subject to pecuniary or criminal penalties and make any contracts formed involving cartels invalid. The banned cartel conducts as the Minister has pointed to are price fixing—that is companies agreeing on a set price or discount—restricting output where companies agree to reduce the supply of goods or services; market allocating which is agreeing to pursue different customers so as not to compete; and bid rigging which is agreeing on prices to submit for tenders. These provisions only apply of course between companies that compete with each other not between supply and distributor or other vertical arrangements. Joint ventures between companies would also not be caught by this legislation. 
I think in essence it is one of those moments where we can agree that the substance and the detail of this legislation are important. Those of us who have been in business know that. It is important. It will be supported. I would perceive that unless there is a catastrophe the Labour Party will support it right through—and by catastrophe I mean the Government mismanages this issue in the same way that it has mismanaged things like asset sales and other important issues before this Parliament—because we believe like all parties that we have to ensure that the regime that business operates in both domestically and internationally allows our entrepreneurs to grow their businesses to make the money to put bread on the table and to employ people because that is what a business does. Some decry business. Without business we would not have economic growth. Some people decry economic growth I think in this Parliament—one or two interesting folk from the Flat Earth Society—but economic growth is important as are exports. 
But I just say to the Minister please get your priorities right. Please ensure that we do not have silliness like dealing with the repeal of Acts that do not exist while legislation like this lies upon the Table and languishes. It is important for New Zealand.