Commerce Commission v PGG Wrightson Ltd - [2016] NZHC 2921

ORDER PROHIBITING PUBLICATION OF INFORMATION RELATING TO SALARIES OF THE THIRD, FOURTH, FIFTH, SIXTH AND SEVENTH DEFENDANTS.
ORDER THAT COURT FILE NOT BE SEARCHED, COPIED OR INSPECTED WITHOUT LEAVE OF A JUDGE.

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
COMMERCIAL LIST

CIV 2015-404-1750 [2016] NZHC 2921

UNDER Sections 27, 30 and 80 of the Commerce Act 1986

BETWEEN

COMMERCE COMMISSION Plaintiff

AND

PGG WRIGHTSON LTD First Defendant

ELDERS RURAL HOLDINGS LTD Second Defendant

NIGEL JOHN THORPE Third Defendant

DONALD HUGH JAMES BAINES Fourth Defendant

DOUGLAS MICHAEL EDWIN CARTRIDGE Fifth Defendant

ANDREW CLARK Sixth Defendant

STUART IAN CHAPMAN Seventh Defendant

Hearing: 2 December 2016

Counsel:

J C L Dixon and L C A Farmer for Plaintiff
No appearance by or on behalf of First and Second Defendants
R Raymond QC for Third to Sixth Defendants
G Hall for Seventh Defendant

Judgment:

5 December 2016

JUDGMENT OF HEATH J

This judgment was delivered by me on 20 April 2016 at 4.00pm pursuant to
Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar

COMMERCE COMMISSION v PGG WRIGHTSON LTD [2016] NZHC 2921 [5 December 2016]

Introduction

[1] The combined effect of ss 27 and 30 of the Commerce Act 1986 (the Act) is to render of no effect any “contract, arrangement or understanding” that has the purpose, or the likely effect, of substantially lessening competition in a market. Section 80(1) of the Act provides that those who engage (or attempt to engage) in conduct that is in contravention of those provisions are liable to pay pecuniary
penalties. In the case of an individual, the maximum penalty is $500,000.1

[2] This proceeding concerns an arrangement entered into in the period between

5 April 2011 and 16 April 2012. It involved a number of stock and station agents, including PGG Wrightson Ltd (Wrightsons) and Elders Rural Holdings Ltd (Elders). The arrangement was called the “Tagging Fee Agreement” (the Agreement). During the relevant time, Wrightsons and Elders were in competition, both as stock and station agents and saleyard owners. The Commerce Commission (the Commission) alleged that the conduct of both companies and the individuals in each who promoted and implemented the arrangement amounted to illegitimate price-fixing, contrary to s 27.

[3] Elders has not admitted liability. The proceeding continues, so far as it is concerned. Wrightsons has admitted its breach. Its contravening conduct involved three distinct arrangements. In addition to the Agreement, Wrightsons has admitted involvement in two other arrangements which breached s 27. They were called the
“Yard Fee Agreement” and the “RFID Administration Fee Agreement”.2

[4] Having admitted its conduct, Wrightsons entered into an agreement with the Commission to pay a pecuniary penalty of $2,700,000. As a penalty must be ordered by this Court, any such agreement requires the Court’s approval. This Court sanctioned the agreement, and, on 22 December 2015, imposed a penalty in that
sum.3

1 Commerce Act 1986, s 80(2B).
2 RFID means Radio Frequency Identification Device. This is the device that was used for tagging the animals. See…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Commerce Commission v PGG Wrightson Ltd

Details

AGLC: Commerce Commission v PGG Wrightson Ltd [2016] NZHC 2921
Case: [2016] NZHC 2921
Decision Date: 5 December 2016

CaseChat Overview and Summary

This case involved proceedings brought by the Commerce Commission against PGG Wrightson Ltd (Wrightsons) and Elders Rural Holdings Ltd (Elders), as well as certain employees of the companies, for breaches of the anti-competitive conduct provisions of the Commerce Act 1986. The Commission alleged that Wrightsons and Elders had entered into an agreement that amounted to price fixing in relation to the fees charged for the tagging of cattle, in breach of section 27 of the Act. Wrightsons admitted its liability, while Elders denied it. The case against five individuals employed by Wrightsons and Elders was that they were complicit in the breaches of the Act caused by the implementation of the agreement. The Court was required to decide whether the penalties proposed by the Commission against the five individuals were appropriate. The Court found that the penalties were appropriate and imposed them as follows: $25,000 for Mr Nigel Thorpe and Mr Stuart Chapman, $20,000 for Mr Donald Baines and Mr Douglas Cartridge, and $15,000 for Mr Andrew Clark. The Court also made orders for confidentiality of the salaries of the individuals and to protect the Court file from being searched, copied or inspected without leave of a Judge. The proceeding remains extant as against Elders.

Orders