Penalty Imposed For Taxi Cartel Conduct

The High Court has ordered Hutt and City Taxis Limited (Hutt & City) to pay a penalty of $150,000 in relation to fixing the prices of taxi fares.

The Commission filed proceedings against Hutt & City in May 2021.

The Commission alleged, and Hutt & City admitted, that Hutt & City breached the Commerce Act by agreeing with two competing taxi companies to implement a minimum charge of $25 for pick-up taxi trips from the on-demand taxi rank at Wellington Airport. The companies discussed the design and distribution of stickers that would display the minimum charge in taxis and Hutt & City distributed the stickers to its drivers and implemented the charge when drivers began receiving the stickers.

The agreement was reached in September 2020 and it took effect in October 2020. The conduct ceased in November 2020, after the Commission began investigating.

The High Court imposed penalties of $150,000 against Hutt & City, payable in instalments over the next four years. The Court found the appropriate starting point was within the range of $500,000-$600,000. After taking into account a discount for mitigating circumstances, the end penalty was further reduced to take account of Hutt & City’s financial circumstances.

The Court noted that the fact that Hutt & City instigated the agreement, and that its directors were aware of it, and approved it (with the exception of one director), spoke to the seriousness of the conduct.

“Cartel conduct harms consumers by preventing businesses competing to provide better quality services at better prices, and it harms businesses that are trying to compete fairly,” said Commission Chair Anna Rawlings.

“Even agreements like this that are short lived can give rise to serious consequences for businesses, but also for individuals who are involved. In addition to financial penalties, since April this year, individuals involved in cartel conduct can be liable for a term of imprisonment of up to 7 years so it is more important than ever that businesses, their directors and employees make sure they understand how to stay on the right side of the law,” said Ms Rawlings.

Businesses or individuals wishing to report cartel conduct should contact the Commission, and those who consider they may be party to cartel conduct should do so as soon as possible. The Commission can grant leniency to the first member of a cartel who approaches it, provided they meet the requirements for leniency. Immunity against criminal sanctions is also available.

Businesses and individuals can also use the Commission’s anonymous whistleblower tool.

A copy of the judgment is available on the Commission’s case register.

Background

A cartel is where two or more businesses agree not to compete with each other. This conduct can take many forms, including price fixing, allocating markets, rigging bids or restricting output of goods and services. See more information on what is a cartel. The Commerce (Criminalisation of Cartels) Amendment Act 2019 came into effect in April. Now, businesses and individuals can be liable for criminal conviction and individuals convicted of engaging in cartel conduct could face a term of imprisonment of up to seven years.

Read more on Cartel Criminalisation.

Businesses affected by the COVID-19 pandemic can seek Commission clearance or authorisation for cartel conduct.

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