Faafoi KrisCOMMERCE (CRIMINALISATION OF CARTELS) AMENDMENT BILLFirst ReadingHon KRIS FAAFOI (Minister of Commerce and Consumer Affairs): I move That the Commerce (Criminalisation of Cartels) Amendment Bill be now read a first time. I nominate the Economic Development Science and Innovation Committee to consider the bill.This bill seeks to amend the Commerce Act 1986 to introduce criminal sanctions for serious cartel conduct. Last year the previous Government removed criminalisation provisions from the bill through a Supplementary Order Paper submitted to the committee of the whole House. This Government believes that was a mistake. We believe the previous Government failed to understand the need for strong deterrents to prevent parties from intentionally engaging in cartel conduct.Serious cartel conduct harms New Zealand consumers. Cartels are formed when competitors agree to fix prices restrict output or allocate markets. This reduces competition in the market. This results in high costs and reduced choice for ordinary New Zealanders. Labour committed to implementing this reform and it is being delivered by this coalition Government. Criminalising cartel conduct is necessary to protect consumers and honest business. A criminal sanction will send a clear message that our society is not willing to tolerate this type of behaviour. It'll also provide a clear deterrent to those who deliberately engage in cartel conduct. Increased awareness of criminalisation will reduce unintended cartel conduct as businesses will more thoroughly consider the competition impacts of their arrangements.Internationally most of our trading partners have criminalised cartel conduct—Australia Canada the United States and the UK—and cartels can cross borders as we have seen in the past. Aligning our laws with these jurisdictions should allow the Commerce Commission to participate more fully in international cartel investigations. This bill implements a criminal regime for cartel conduct that will run alongside the civil regime. A sanction for an individual will be up to seven years' imprisonment a half a million dollar fine or both. And this puts this offence on par with white-collar crime and corruption. In the eyes of most New Zealanders this conduct is worthy of such a sanction.This bill went through a full select committee process last year. However given the previous Minister's disregard for the committee's recommendation to include criminal sanctions for the worst cartel behaviours the bill must return to a select committee. I would encourage the business community and all other stakeholders to consider making a submission. It is important that the Government works with the business community to achieve the most robust and efficient business environment for all New Zealanders. In the interests of business certainty we will retain sound provisions of the current legislation for example the exception relating to collaborative activities.The collaborative clearance regime introduced last year allows businesses to seek assurance from the Commerce Commission that their proposed joint ventures meet the requirements of the collaborative activity exception. In short this will mean that businesses can check if their proposed collaboration is free of competition risk. This is not compulsory and businesses can continue to self-assess as they mostly do now but this clearance regime gives them an option for certainty.Honest businesses should have no concerns and this bill provides a defence for those who believed a collaborative activity exception applied. For similar reasons the bill also provides a defence for those who believe their liner shipping block exception applies to any conduct in question. I believe that this block exception is well targeted. It balances the need for the industry to work together to achieve efficiencies but to do so in a way that does not harm competition. I do not propose to revisit this matter during the course of the consideration of this bill. It has already been well considered by this House.The regime won't come into force until August next year after which we can review the block exception in due course if the need arises. This bill provides an appropriate transition period of two years and during this time I expect business and individuals to take note of the impending introduction of criminal sanctions and to reflect on their conduct ongoing and proposed.This Government has an ambitious programme of competition law reform and I will soon introduce a bill enabling the Commerce Commission to conduct market studies. This will allow the commission to shine a light on markets that aren't performing as effectively as they could or delivering the best outcomes for consumers. It would also allow Governments to assess whether further action is needed to protect consumers and our robust business environment.The review of section 36 of the Commerce Act will also continue under this Government. In New Zealand many of our markets have few dominant players and this provision of the Commerce Act is vitally important to deter the misuse of market power. The section is clearly in need of reform to deter firms from abusing their market power but also to make it workable in terms of enforcement. We are in a position to assess the changes implemented in Australia but at the same time ensuring any reform is fit for purpose in the New Zealand context.I look forward to engaging with stakeholders in the most appropriate mechanism as an alternative and this work underpins the Government's commitment to build a strong economy be fiscally responsible and provide certainty for consumers and business. We will work with business to deliver shared prosperity for all. This bill is one of a number on our work programme that will encourage the economy to flourish. I commend this bill to the House.