Little AndrewCOMMERCE (CRIMINALISATION OF CARTELS) AMENDMENT BILLThird ReadingHon ANDREW LITTLE (Minister of Justice) on behalf of the Minister of Commerce and Consumer Affairs: I move That the Commerce (Criminalisation of Cartels) Amendment Bill be now read a third time. This bill is an important element of the Government's reform programme to strengthen New Zealand's competition law in line with some of our major trading partners. The criminalising of cartel behaviour is the second legislative step that this Government has taken since coming into office the first being the introduction of the market studies power. The third will be the misuse of market power and an amendment to section 36 of the Commerce Act. This Government supports honest business. We are committed to growing an economy that works for all New Zealanders. This bill delivers on that by introducing a new criminal offence for serious cartel conduct that harms New Zealand business consumers and the productivity of the economy. Cartel conduct involves agreements being made between competitors to fix prices restrict output and allocate markets. Such conduct can cause significant harm to ordinary New Zealanders and businesses operating honestly. Cartel conduct is currently subject to a civil penalty regime under the Commerce Act. The civil regime has worked well and I consider it will continue to do so. However we need an extra level of sanction to ensure that the most serious cartel conduct is deterred and detected effectively. The civil regime will remain the primary option for prosecuting breaches of New Zealand's cartel prohibition. I've heard concerns about the chilling effect this bill will have. I want to address this concern again. Firstly nothing in this bill extends what is currently unlawful. All this bill does is add a different sanction on top of the civil regime for serious cases. The exemptions to the Commerce Act that protect pro-competitive conduct will also apply to the criminal offence. This provides for businesses engaged in collaborative activities joint buying arrangements and vertical supply contracts. To complement this a new defence will apply to those who have made a reasonable mistake of fact in relation to the application of the exceptions. There is a two-year transitional period before the criminal offence will come into effect. This will allow businesses to assess their conduct to ensure that their conduct isn't caught by the criminal offence provisions. If they are acting lawfully now they have no need to worry about the criminal regime. This period of time will also allow the Commerce Commission and Crown Law to make preparations for the detection and prosecution of the offences. I also expect that the Commerce Commission will issue guidance on how it will approach the selection of cases for criminal prosecution. Businesses that wish to ensure that their collaborative activities are lawful can apply to the Commerce Commission for clearance. This will allow those who have self-assessed and found their conduct to be on the line to come in for formal assessment of their conduct if they wish. I believe that most businesses will be able to self-assess and assure themselves that their conduct is lawful. The commission has published extensive guidance in this area and this should be the first port of call for businesses that are self-assessing. Honest business should not be concerned. I am confident the introduction of criminalising cartels has sufficient provisions to ensure legitimate business practices won't be penalised while at the same time sending strong disincentives for cartel conduct.I said at the start of the speech that this was the second legislative step taken by this Government. The first was the Commerce Amendment Act that was passed late last year empowering the Commerce Commission to undertake market studies. The Commerce Commission is hard at work at its first market study into retail fuel and I look forward to receiving their final report by the end of the year. The third step in our reform programme is amending section 36 of the Commerce Act dealing with the misuse of substantial market power. The Ministry of Business Innovation and Employment is consulting on these reforms. I've made it clear in the past that I do not consider that section 36 is working effectively to protect competition. The consultation is currently open and I encourage all interested parties to make their views known. This trifecta of legislative reforms to New Zealand's competition law will ensure our markets are operating efficiently business confidence is high and regulatory settings are well managed. As the Minister of Commerce and Consumer Affairs' colleague I am pleased to be part of a Government who is bringing back the criminal offence for cartel behaviour. The previous Government did a U-turn on it at the last minute and removed it. I know that deep down the members opposite support this bill as they've said so previously before their last commerce Minister reversed their own policy. In fact I quote the Hon Craig Foss then the Minister of Commerce Effective competition enables and drives innovation and productivity. In contrast anti-competitive conduct including hard-core cartel conduct lifts prices above competitive levels to the detriment of consumers." Oh how this House misses the Hon Craig Foss.I'm aware also that Simon O'Connor the honourable member said this at one point: "This [criminalisation of cartels] is ultimately a bill at the heart of what the National Party believes is a way forward for our economy." And the honourable member Brett Hudson also said "I am delighted with this bill. It is clearly taking on the evils the worries and the concerns around hard-core cartel behaviour".The bill we are here for today—[Interruption] I'm trying to truncate the speech process by speaking for members opposite but the bill we are here for today will enhance the effectiveness of New Zealand's competition law and will ensure that cartel conduct that is intentional and harms competition is subject to criminal sanctions. I believe that this will act as a strong deterrent against cartel conduct while providing certainty for businesses so that they can conduct lawful business with ease. As I said at the beginning this Government supports honest business. I commend this bill to the House."