Commerce Commission v Visy Board (NZ) Ltd - [2013] NZHC 2097

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
COMMERCIAL LIST

CIV-2007-404-007237 [2013] NZHC 2097

BETWEEN COMMERCE COMMISSION Plaintiff

ANDVISY BOARD (NZ) LIMITED First Defendant

VISY BOARD PTY LIMITED Second Defendant

J R S CARROLL Fifth Defendant

J G HODGSON Sixth Defendant

Hearing: 16 August 2013

Appearances: J C L Dixon and B Hamlin for Plaintiff
A R Galbraith QC and S C Keene for First and Second
Defendants
S Mills QC and W Blennerhassett for Fifth Defendant

Judgment: 21 August 2013

JUDGMENT OF VENNING J

This judgment was re-issued and delivered by me on 21 August 2013 at 5.00 pm, pursuant to Rule
11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors: Meredith Connell, Auckland
Russell McVeagh, Auckland
Minter Ellison Rudd Watts, Auckland

COMMERCE COMMISSION v VISY BOARD (NZ) LIMITED [2013] NZHC 2097 [21 August 2013]

Introduction

[1] For the purposes of this penalty hearing only the defendants, Visy Board (NZ) Limited (Visy NZ), Visy Board Pty Limited (Visy Australia) and Mr Carroll have admitted certain breaches of Part 2 of the Commerce Act 1986 (the Act). The Court is asked to impose a pecuniary penalty under the Act on the basis of the facts, again agreed for the purposes of this proceeding only. The Commerce Commission (the Commission), the Visy companies and Mr Carroll have reached agreement on the quantum of penalty that is appropriate in each case.

Background

Parties

[2] At the relevant time between January 2000 and July 2004 Visy NZ was a wholly owned subsidiary of Visy Australia. It carried on business in New Zealand as a supplier of corrugated fibre packaging (CFP). Visy NZ employed approximately
175 staff.

[3] Visy Australia supplied companies with CFP in Australia. It was one of two main suppliers in the Australian market for the supply of CFP and employed approximately 1900 staff.

[4] During January 2000 to July 2004 Mr Harry Debney was the CEO of Visy Australia. The fifth defendant, Rod Carroll, was the business manager of Visy Australia. Between January 2004 and July 2004 Mr Carroll was the general manager of Visy Board, a division of Visy Australia.

[5] Mr Carroll was familiar with the New Zealand market, having been general manager of Visy NZ prior to 2001. Andrew Gleason, the general manager for Visy NZ, reported directly to Mr Carroll by way of weekly conference calls, other calls and correspondence.

The CFP industry

[6] At all material times there was a market in New Zealand for the manufacture and supply of CFP. The three major manufacturers and suppliers of CFP products in New Zealand were:

(a) Carter Holt Harvey Limited (CHH);

(b) Amcor Packaging (New Zealand) Limited (Amcor NZ); and

(c) Visy NZ.

[7] As noted, in Australia there were at the time two major manufacturers and suppliers of CFP products:

(a) Amcor Australasia Ltd (Amcor), a division of Amcor Limited; and

(b) Visy Australia.

[8] Total sales by the three manufacturers and suppliers of CFP in New Zealand by value in 2004…

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: [2013] NZHC 2097
Decision Date: 21 August 2013

CaseChat Overview and Summary

In Commerce Commission v Visy Board (NZ) Limited, the Commerce Commission brought proceedings against Visy Board (NZ) Limited, Visy Board Pty Limited, and Mr. Carroll, alleging breaches of the Commerce Act 1986 through anti-competitive conduct in the supply of corrugated fibre packaging (CFP) in New Zealand. The defendants admitted certain breaches in relation to the supply of CFP to Coca Cola, Goodman Fielder, and Fonterra between January 2000 and July 2004. The court was required to determine the appropriate pecuniary penalties for the admitted breaches.

The court considered several factors in determining the penalty, including the maximum penalty, the starting point for the offending, and any mitigating or defendant-specific factors. The maximum penalty for each company was $10 million per breach, leading to a total potential penalty of $45 million. The court established a starting point of $4.5 million to $5.7 million, taking into account the seriousness of the conduct, the role of the defendants, and the potential commercial gain. Mitigating factors such as admission of liability, co-operation with the Commission, and the implementation of a compliance program led to a reduction in the penalty. The court accepted the recommended penalties of $3.6 million for Visy Australia and $25,000 for Mr. Carroll, with Visy Australia also required to pay $50,000 in costs.

Orders