Commission Files Proceedings Against Alleged International Freight Forwarding Cartels

The Commerce Commission has filed civil proceedings in the High Court against two international freight forwarding companies, Mondiale Freight Services Limited (Mondiale) and Oceanbridge Shipping Limited (Oceanbridge), and four individuals associated with the companies, alleging each company entered into and gave effect to cartel agreements.

The Commission alleges the defendants agreed with competing freight forwarders not to compete for their customers. These were separate cartels and the Commission does not allege Oceanbridge and Mondiale entered into any agreements with each other. The competing freight forwarders also purchased freight forwarding services from the defendants.

The Commission has agreed settlements to resolve the separate proceedings with each of the defendants. A penalty hearing will be scheduled shortly.

As this case is now before the Court, the Commission cannot comment further at this time.

Background
International Freight Forwarding
International freight forwarding refers to all aspects of the logistical arrangements for the movement of cargo in and out of the country, by air or sea. Generally, international freight forwarders do not physically carry the cargo between countries, but arrange for it to be moved by a third party, such as an airline or shipping line, as well as offering a range of other related services (such as customs clearance).

The alleged arrangements in this case relate to agreements reached prior to the COVID-19 pandemic. The arrangements took place before and after the Commerce Act was amended in 2017. All conduct ceased before 8 April 2021.

Cartel conduct
A cartel is where two or more businesses agree not to compete with each other including by price fixing, allocating markets or customers, rigging bids, or restricting the output or acquisition of goods and services.

Cartel conduct is prohibited under section 30 of the Commerce Act. Before section 30 of the Act was amended in 2017, it prohibited price fixing. The Commission alleges that the conduct in this case breached both the former price fixing prohibition and the prohibition against cartel conduct.

As of 8 April 2021, cartel conduct is now punishable with a term of imprisonment of up to 7 years, underlying just how serious and harmful offending of this nature can be. Conduct which occurred before 8 April 2021 is not subject to these new penalties.

You can find more details about cartel conduct on the Commission’s website.

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