Commerce Commission v Rural Livestock Ltd - [2015] NZHC 3361

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-002638 [2015] NZHC 3361

UNDER
Sections 27, 30 and 80 of the Commerce

Act 1986

BETWEEN

COMMERCE COMMISSION Plaintiff

AND

RURAL LIVESTOCK LIMITED Defendant

Hearing: 11 December 2015

Counsel:

J C L Dixon and L C A Farmer for Plaintiff
H McIntosh for Defendant

Judgment:

22 December 2015

JUDGMENT OF ASHER J

This judgment was delivered by me on Tuesday, 22 December 2015 at 11 am pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:
Meredith Connell, Auckland.
H McIntosh, Wellington.

COMMERCE COMMISSION v RURAL LIVESTOCK LTD [2015] NZHC 3361 [22 December 2015]

Introduction

[1] Following the introduction of the National Animal Identification and Tracing Act 2012, Rural Livestock Limited (Rural) was involved in the implementation of the regulatory changes required by the Act. In doing so Rural agreed to industry wide fee agreements that it now admits constituted price fixing under the Commerce Act 1986.

[2] The purpose of this judgment is to declare that in doing so Rural contravened the Commerce Act and to impose a penalty for those breaches. The assessment of penalty is on the basis of a detailed statement of facts agreed between the Commerce Commission (the Commission) and Rural for the purposes of this hearing. The Commission and Rural have agreed the appropriate quantum of penalty is in the range of $475,000, and have filed submissions in support.

[3] One other defendant, PGG Wrightson Ltd (PGW) has also pleaded guilty, and I have issued a penalty decision today in respect to it.1 I heard Rural’s case directly after hearing PGW’s. Given that the background to the infringements is the same and the agreed statement of facts contains identical material, much of what I have said in each decision is the same, and I follow the same structure. However, there are significant differences between the position of each and the penalties imposed.

Background

The party to this proceeding

[4] Rural is a large privately owned New Zealand livestock company. It runs a range of services including running clearing sales, arranging grazing, livestock auctions and valuations. It also acts as an agent for farmers selling and purchasing livestock at saleyards. It has a 6.8 per cent share of the national market for the sale of cattle, and ownership interests in seven saleyards in the South Island, but only a
major interest (in excess of 10 per cent) in one saleyard.

1 Commerce Commission v PGG Wrightson Ltd [2015] NZHC 3360.

[5] For the financial year ending 30 June 2015 its annual revenue was [redacted]

and its net profit was estimated before tax to be [redacted].

[6] Rural is one of the defendants to this proceeding, the majority of whom deny the allegations made by the Commission. The liability of the other defendants is not in issue in these proceedings.

The livestock industry

[7] The principal methods of trading cattle in New Zealand are by auction at saleyards, on farm auction, online auction, direct…

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.

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Details

Case: [2015] NZHC 3361
Decision Date: 22 December 2015

CaseChat Overview and Summary

In Commerce Commission v Rural Livestock Limited, Rural Livestock Limited, a New Zealand livestock company, was involved in industry-wide fee agreements that constituted price fixing under the Commerce Act 1986. The primary legal issue was whether these agreements contravened the Act and, if so, what penalty should be imposed. The court had to consider the nature and extent of the commercial gain, the deliberateness of the conduct, the duration of the contravening conduct, the harm to the market, and comparable cases to determine the appropriate penalty. The court assessed the penalty based on the principles of general and specific deterrence and the purposes of the Commerce Act, which aim to promote competition in markets for the long-term benefit of consumers in New Zealand. After considering all relevant factors, the court imposed a pecuniary penalty of $475,000 for the contravening conduct. The penalty was to be paid in instalments over a period of time, and no interest was to be payable on any part of the penalty. There was no order as to costs.

Orders