Antitrust Litigation in New Zealand

New Zealand is a mature antitrust litigation jurisdiction.

New Zealand's competition regulator, the New Zealand Commerce Commission (NZCC) has the role of enforcing New Zealand's primary competition law legislation, the Commerce Act 1986 (Commerce Act). In doing so, the NZCC can seek pecuniary penalties, injunctions, divestments and other remedies for a breach of the Commerce Act in the High Court (it cannot impose such remedies itself). 

Private parties can also bring proceedings – they may seek compensatory damages for any loss suffered, injunctions and exemplary damages (in some cases) for breach of the Commerce Act in the High Court. Antitrust representative proceedings (proceedings which may be brought as "class actions" in other jurisdictions) are also possible; however, no such proceedings have been brought to date in New Zealand.

To date, the majority of antitrust litigation in New Zealand has been brought by the NZCC, although a number of private proceedings have also been brought over the years. All statements in this chapter are made based on information available as at 3 August 2022.

Active Antitrust Litigation Cases 

NZCC litigation

Between January 2021 and July 2022, the NZCC brought five civil proceedings before the High Court - three of which imposed pecuniary penalties for breach of the cartel prohibition, one of which imposed pecuniary penalties for an attempted breach of the cartel prohibition, and one of which found a breach but did not impose pecuniary penalties (agreed declarations were made instead).

Based on the NZCC's public register, the NZCC currently has three open investigations into anti-competitive conduct – one relating to the supply of timber pallets, one relating to retail, and one relating to the supply of financial and insurance services. However, the NZCC has not yet filed proceedings in respect of these cases. The NZCC also likely has other open investigations that are not referred to on its public register. The NZCC has also filed proceedings in the High Court against a software company alleging that its non-notified acquisition of a competitor substantially lessened competition in certain building software markets. It is understood the defendant has reached an agreement on an appropriate penalty, which is expected to be approved by the High Court shortly.

Private litigation

The authors are not aware of any New Zealand court judgments between January 2022 and July 2022 in relation to private litigation proceedings brought for a breach of the Commerce Act (although such proceedings are not uncommon and can often be pleaded alongside other claims). Some notable private litigation actions include:

• proceedings brought before the High Court in 2019 involving allegations by Payment Express Ltd that Paymark Ltd had taken advantage of its substantial degree of market power in the EFTPOS bank switching market for an anti-competitive purpose in breach of the misuse of market power prohibition under the Commerce Act (Payment Express Ltd v Paymark Ltd [2019] NZHC 2027 [16 August 2019]); 
• proceedings brought before the High Court in 2016 involving an allegation by E-Trans International Finance Ltd, a money remitter, that the termination of E-Trans' bank account by Kiwibank, a retail banking institution, had the effect of substantially lessening competition in breach of the anti-competitive agreements prohibition under the Commerce Act (E-Trans International Finance Ltd v Kiwibank Ltd [2016] NZHC 1031 [19 May 2016]); and 
• proceedings brought before the High Court in 2010, and then appealed to the Court of Appeal in 2014, involving allegations by Todd Pohokura Ltd that Shell Exploration Ltd and OMV NZ Ltd had entered into anti-competitive offtake agreements in breach of the anti-competitive agreements and cartel prohibitions under the Commerce Act (Todd Pohokura Limited v Shell Exploration NZ Limited CA508/2010 [2015] NZCA 71 [20 March 2015]. 

Recent Developments in Antitrust Litigation

Two developments relevant to antitrust litigation in New Zealand relate to the following.

Representative proceedings (ie, class actions)

This is a developing area of law in New Zealand. On 27 June 2022, the Law Commission published a final report on class actions and litigation funding (the "Law Commission Report"), recommending a new Class Actions Act that is clearer and more accessible than the existing common law regime which has developed around representative proceedings under Rule 4.24 of the High Court Rules 2016 (the "High Court Rules"). It recommended, among other things, preserving both opt-in and opt-out representative proceedings. The government will now consider the Law Commission Report. If the government accepts the recommendations, it will add the reform work to its legislative agenda. If the government rejects the recommendations, it must present a response to parliament within 120 working days from 27 June 2022, when the Report was tabled in parliament. No representative proceedings have been taken in respect of Commerce Act breaches to date, but representative proceedings generally are becoming more common in New Zealand.

Criminalisation of cartel conduct

On 8 April 2021, the new criminal cartel prohibition came into effect. From 8 April 2021, individuals and firms that are found to have intentionally entered into or given effect to a contract, arrangement or understanding between competitors that contains a "cartel provision" can be subject to criminal proceedings. Individuals and firms liable under the provision will be subject to criminal penalties of:

• for individuals, imprisonment of up to seven years; and/or
• a criminal fine of up to NZD500,000 for individuals and a fine up to the greater of NZD10 million, three times the commercial gain of the offence, or 10% of the company's turnover for companies. 

This means that even if a cartel was entered into before 8 April 2021, if the provisions of the cartel are intentionally given effect to after 8 April 2021, the act of giving effect to the cartel provision can be subject to the criminal regime. 

The NZCC has not yet brought any criminal proceedings under the new criminal regime.

With the criminalisation of cartel conduct, the NZCC has bolstered its efforts in providing greater general awareness of the cartel prohibition, including by providing additional educational resources outlining how to identify and avoid cartel conduct and encouraging individuals and businesses to report cartel conduct by way of seeking leniency and/or immunity. 

The NZCC has noted that cartels are a priority for the NZCC in its Cartel Leniency and Immunity FAQ as below. 

"Cartels are a priority for the Commission because they harm New Zealand consumers and businesses. International studies show cartels can cause prices to rise by (on average) between 18–20%. Both domestic and international cartels are a priority for the Commission – whether they are based in New Zealand or involve international parties that participate in, and/or affect markets in New Zealand." 

The theoretical maximum penalties available for pecuniary penalty proceedings for businesses increased in 2017 to include 10% of turnover in each accounting period in which the contravention occurred. The NZCC has been willing to recommend material fines to the High Court. Although the NZCC has not issued guidance as to how it assesses the penalties it recommends to the court, the key source of guidance in relation to penalties for cartel conduct has been based on previous sentencing decisions by the courts. Accordingly, the NZCC's submissions on penalties will be submitted to the court but the level of the penalty will be a matter of discretion for the court. The court's approach has been to determine the maximum penalty for separate cartel conduct, and then to address any mitigating factors. 

The maximum penalties available for businesses for breach of the prohibition on anti-competitive business acquisitions was recently increased from NZD5 million to the greater of NZD10 million, or three times the value of any commercial gain resulting from the contravention, or if commercial gain is not readily ascertainable, 10% of turnover. 

Legal Basis for a Claim for Damages

Private parties are able to bring their own civil proceedings for breaches of the restrictive trade practices part of the Commerce Act under Section 82, and for breaches of the prohibition on anti-competitive acquisitions under Section 84A. The legal basis for a claim for damages is based on a breach of the Commerce Act. In order to bring a claim for damages and establish liability under Section 82 or Section 84A, a person must prove that they have suffered "loss or damage" as a result of the breach. There must be a causal link so a person must prove that the loss or damage was caused by the breach. 

The Commerce Act enables both compensatory damages and exemplary damages to be awarded. Compensatory damages cover the actual loss or damage suffered as a result of the contravening conduct. Exemplary damages are punitive in nature and are intended to punish a defendant. They can be awarded in addition to compensatory damages and in addition to pecuniary penalties under the Commerce Act, however, to date, exemplary damages in relation to Commerce Act breaches have not been awarded.

No Distinction Between Standalone and Follow-On Damages 

There is no relevant distinction in New Zealand law between "standalone" and "follow-on" damages. This is because plaintiffs seeking to claim damages, including those arising out of a breach of the Commerce Act, are required to demonstrate that a breach has occurred. This is the case even if there is already a court judgment successfully finding a party in breach (for example, proceedings brought by the NZCC). In other words, a prior judgment cannot be used as proof that a breach has occurred. In practice, however, a plaintiff should be better positioned to demonstrate a breach if the court has previously found a breach. For example, the judgment will likely contain details identifying witnesses and documents a plaintiff would need to rely on. The plaintiff can also request documents from the NZCC under the Official Information Act 1982 (OIA) and apply for non-party discovery orders against the NZCC – see 5.1 Disclosure/Discovery Procedure.

Lay Members Appointed to the High Court

There are no specialist competition courts and/or competition judges in New Zealand for antitrust litigation. However, under Sections 77 and 78 of the Commerce Act, "lay members" are appointed to the High Court (on the recommendation of the Attorney-General) to hear Commerce Act matters. In Commerce Act proceedings, a judge may (of their own motion or on application of a party to the proceedings) require a lay member(s) to hear and determine the proceedings alongside the judge.   

Lay members are required to meet the same rules of impartiality as a judge and are appointed to ensure that expert evidence on complex competition cases is properly understood, tested and assessed by the High Court. Once a lay member has been appointed to a case, they become a member of the court for that particular case. 

The decision of a majority (including the judge or, where more than one judge sits, including a majority of the judges) of the members present at a sitting of the court shall be the decision of the court; and if the members present are equally divided in opinion, the decision of the judge, or of a majority of the judges, shall be the decision of the court.

Commercial Panel of Judges

The High Court also has a commercial panel of judges (who are all High Court judges) who are available to deal with commercial proceedings meeting certain criteria, including proceedings brought by public authorities to enforce regulatory standards of commercial behaviour. Parties are able to request assignment of a panel judge when proceedings are filed.   

Binding Nature of NZCC Decisions

Under Sections 75(1)(e) and 91(1) of the Commerce Act, there is a right of appeal to the High Court against any decisions of the NZCC except for certain specified determinations relating to economic regulation (noting, however, that the NZCC cannot itself impose pecuniary penalties and remedies for breaches of the Commerce Act – the NZCC has to bring court proceedings as it is the court which has the ability to impose such penalties and remedies).

The decisions of the NZCC are not binding on any New Zealand court. However, there are certain statutory protections against challenging a decision of the NZCC. For example, if the NZCC clears or authorises a merger or acquisition and a merger or acquisition is carried out within one year of the date on which it is cleared or authorised, during that one-year period, the merger or acquisition cannot be challenged by a third party in the High Court. 

Decisions of regulators in other countries or jurisdictions are not binding on any New Zealand court.

NZCC Intervention in Damages Actions

The NZCC may, with leave of the court and subject to any conditions imposed by the court, intervene in any proceedings instituted under the Commerce Act, including private proceedings. The NZCC has published guidance on intervention in private proceedings which states that the NZCC, on occasion, may seek to intervene in private litigation if it considers that its involvement will assist the court and otherwise promote the public interest. 

The burden of proof is generally on the party seeking to establish a breach of the Commerce Act (the NZCC, or a private party). However, defendants in proceedings relating to a contravention of Section 30 (entering into or giving effect to a cartel provision), relying on a statutory exception to the cartel prohibition in Sections 31-33, must prove the relevant exception applies.

For civil proceedings brought by the NZCC or private parties (and for defendants relying on a relevant exception), the standard of proof is the "balance of probabilities". For criminal proceedings, the standard of proof is "beyond reasonable doubt". 

There is no statutory pass-on "defence" under New Zealand law, and the availability of a pass-on "defence" has not yet been considered by the New Zealand courts. However, the principle of fair compensation and the reference to "loss or damage" in Section 82 tend to support the availability of a pass-on defence and may provide compelling reasons for a court to find it does apply in New Zealand. New Zealand courts generally tend to rely on United Kingdom and Australian case law. The fact that passing-on arguments have been endorsed in the United Kingdom provides further support for the availability of such arguments in New Zealand.

The High Court has held that a defendant to a claim for damages under Section 82 of the Commerce Act is only liable for the loss or damage that their conduct has caused. It is for the plaintiff to prove a causal link exists. It is therefore possible for claims to be brought by direct and indirect purchasers as long as the plaintiff is able to establish loss or damage. 

A variety of factors will impact the duration of a claim, including:

• the nature and complexity of the case;
• whether the proceedings are defended;
• the number of issues in contention;
• the number of witnesses and experts;
• the extent of any discovery; and
• whether the case is subject to any appeal process. 

Where proceedings are brought by the NZCC and the parties have reached a settlement prior to trial, based on a review of the past 9 proceedings since 2019, the duration has been around 2-26 months from the filing of proceedings to a penalty hearing and judgment. A matter running to trial would likely take at least two years from the NZCC or a private party bringing proceedings. 

Both pecuniary penalty proceedings brought by the NZCC under Section 80 and proceedings for damages brought by a private party under Section 82 of the Commerce Act are able to run separately and in parallel (in determining a pecuniary penalty, a court must have regard to any exemplary damages awarded). 

There is no ability to suspend civil proceedings for damages during a parallel investigation by the NZCC. However, the New Zealand courts do have a broad discretion to stay all or part of a civil proceeding "on such conditions as are considered just". For example, stays of civil proceedings have sometimes occurred to enable a previously agreed alternative method of resolving the dispute to occur, ie, arbitration discussed further at 9.2 Alternative Dispute Resolution. There is also a general ability to stay or dismiss criminal proceedings on grounds such as abuse of process, unconscionable or unfair misconduct or delay. Stays are, however, rare and require a high threshold to be met. 

New Zealand does not have formal class action rules or legislation. Class action-style proceedings are called representative proceedings in New Zealand and are conducted as representative proceedings in New Zealand under Rule 4.24 of the High Court Rules 2016. Rule 4.24 of the High Court Rules allows one or more persons to sue, or be sued, on behalf of, or for the benefit of, all persons with the same interest in the subject matter of a proceeding either with the consent of the other persons with the same interest, or with leave of the High Court. 

Representative proceedings in New Zealand are available on an opt-in and opt-out basis. The Supreme Court has recently suggested that the starting point is that the plaintiff's choice of approach should prevail unless good reasons suggest otherwise. Plaintiffs will often choose an opt-out approach given the advantages it offers. However, good reasons to depart from an opt-out approach will exist where, the Supreme Court explained, there is a real prospect of disadvantage to participation in the representative proceeding (for example, the potential for a counterclaim by the defendant) or if the class is small relative to other class actions and there is a "natural community of interest" among class members.

Representative proceedings can be brought on behalf of indirect purchasers as well as direct purchasers, provided they can establish loss or damage and satisfy the requirements for representative proceedings. 

Outside of Rule 4.24 of the High Court Rules, some regulatory bodies also have the power to bring collective proceedings, including the NZCC on behalf of affected consumers under certain statutes (including the Fair Trading Act 1986 and the Credit Contracts and Consumer Finance Act 2003).

Who Can Bring a Representative Proceeding?

Any person with the same interest in the subject matter of the proceeding can bring a representative proceeding. A representative plaintiff who represents the other class members generally must have the same cause of action as members they are seeking to represent. A prospective representative plaintiff must plead in their statement of claim that they are seeking representative status and file an interlocutory application seeking leave to proceed as a representative proceeding. 

Procedure for Bringing a Representative Proceeding

Strictly speaking, New Zealand does not have a "certification process" like Canada and the United States. Rather, leave of the court is obtained to allow an ordinary civil proceeding to proceed as a representative proceeding (under Rule 4.24 of the High Court Rules). 

At the representative orders hearing, the intended representative plaintiff must demonstrate that their application aligns with the principles governing Rule 4.24 of the High Court Rules. The Court of Appeal has summarised the relevant factors that the Court will consider as part of its discretionary assessment, which include: 

• Rule 4.24 of the High Court Rules should be applied to serve the interests of expedition and judicial economy; 
• access to justice is an important consideration;
• whether the parties to be represented have the same interest (a significant common interest in the resolution of any question of law or fact will qualify);
• a representative order can be made even if it only relates to some of the issues in the claim;
• it must be for the benefit of the other members of the class that the plaintiff is able to sue in a representative capacity;
• the court should take a liberal and flexible approach in determining whether there is a common interest;
• the threshold for establishing commonality is not high and the court should be facilitative of representative proceedings; and 
• a representative action should not be allowed if it would deprive a defendant of a defence that could have been raised in a separate proceeding against one or more class members or allow a class member to succeed where they would not have succeeded had they brought an individual claim. 

The Court of Appeal has also held a provisional appraisal of the merits of the proposed claim is required before the grant of leave. The intended representative plaintiff must prove their claims disclose an arguable case on the facts pleaded. This requirement is not intended to create a "mini trial" at the leave stage. The court confines itself to whether there are any obvious defects in the pleading. 

Formal Certification Regime Possible in the Future

The Law Commission Report has recommended a formal certification regime, requiring a proceeding to be certified before it can proceed as a representative proceeding. The proposed test for certification closely mirrors the court's current approach in determining whether a proceeding may continue as a representative proceeding.

Judicial Involvement in Settlement

Despite the absence of a statutory regime for class actions, the Supreme Court has confirmed that as part of its inherent and supervisory jurisdiction over representative proceedings, there is some judicial involvement in the settlement of collective actions. In particular, the Supreme Court has held that the court's approval should be a condition of granting leave under Rule 4.24(b) of the High Court Rules for an opt-out representative proceeding (and consideration should be given to requiring court approval for an opt-in representative proceeding) (Southern Response Earthquake Services Ltd v Ross [2020] NZSC 126, at [82] – [83]).

The Law Commission Report noted that the court's concern is to protect the interests of class members who are not involved with negotiation and settlement but will be bound by it. Thus, the standard the court will apply is whether the proposed settlement is a fair and reasonable compromise of the plaintiff's claims in the interests of the class members as a whole (Ross v Southern Response [2021] NZHC 3497 at [49] – [52] and [61]). The court may have regard to a broad range of factors when making this determination (Ross v Southern Response [2021] NZHC 3497 at [69]). 

Individual settlement remains possible, provided it does not have the effect of settling the class. The High Court (in Ross v Southern Response [2021] NZHC 2453) has confirmed that depending on the stage the litigation has reached, any individual settlement offers should meet the standards for settlement offers developed by Australian case law (which New Zealand courts often look to because they have a more developed class actions regime than New Zealand). Consistent with the Australian standards, settlement offers should be in writing, explain the consequences of accepting or rejecting the offer, afford a genuine opportunity to obtain legal advice, and make clear independent legal advice should be obtained. 

Greater Judicial Oversight Possible

The Law Commission Report recommended greater court oversight, requiring court approval for any settlement of opt-out or opt-in representative proceedings to be binding. If the recommendations are adopted, the court would approve the settlement if it is satisfied that the settlement is fair, reasonable and in the interests of the class, considering a range of relevant factors. The Report also recommended that if a representative plaintiff wants individual settlement of their claim, they must first seek leave to withdraw as the representative plaintiff.

Strike-Out

New Zealand courts are able to strike-out all or part of a pleading if it:

• discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading;
• is likely to cause prejudice or delay;
• is frivolous or vexatious; or
• is otherwise an abuse of the process of the court. 

Summary Judgment

New Zealand courts may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action (or a particular part of any cause of action). Judgment may be given against a plaintiff if a defendant satisfies the court that none of the causes of action in the plaintiff's statement of claim can succeed.

Applications for summary judgment must be made by interlocutory application and be supported by affidavit evidence. An affidavit in support of a plaintiff's application must verify the allegations in the statement of claim to which the plaintiff alleges the defendant has no defence, a belief that the defendant has no defence to the claim and the grounds for that belief. An affidavit in support of a defendant's application must show why none of the causes of action can succeed.

Applications for strike-out and summary judgment have been made in antitrust litigation cases but have rarely been granted because of the complex nature of the facts involved (and, where they have been, largely on the basis that a claim is time-barred).

The Commerce Act applies to conduct in New Zealand where a person:

• engages in conduct, and any act or omission forming part of the conduct occurs in New Zealand;
• is resident, or carries on business in New Zealand and the conduct affects a market in New Zealand; or 
• has a subsidiary or agent in New Zealand that gives effect in New Zealand to the arrangements entered into by the foreign individual or business.

The Commerce Act's prohibition on misuse of market power in trans-Tasman (New Zealand and Australia) markets also extends to engaging in conduct outside New Zealand by an Australian resident or carrying on business in Australia to the extent the conduct affects a market in New Zealand (not being a market exclusively for services).

Civil Proceedings for Pecuniary Penalties and Damages

The NZCC is required to commence any civil proceedings seeking pecuniary penalties for restrictive trade practices within three years after the matter giving rise to the contravention was discovered or ought reasonably to have been discovered. However, no proceedings are able to be commenced ten years or more, after the matter giving rise to the contravention. The same limitation periods apply to actions for damages under Section 82 of the Commerce Act.

In respect of merger control, the NZCC is required to commence any civil proceedings seeking pecuniary penalties within three years after the matter giving rise to the contravention arose. Actions for damages in respect of merger control must be commenced at any time within three years from the time when the cause of action arose.

Criminal Proceedings

There is no limitation period for criminal cartel offences but charges can only be filed for conduct (that is, entering into, or giving effect to a cartel prohibition) occurring from 8 April 2021 (when the criminal cartel prohibition came into effect).

Discovery Generally

Once a proceeding is reasonably contemplated, prospective parties must take all reasonable steps to preserve documents that are, or are reasonably likely to be, discoverable in the proceeding. Discovery is usually ordered at the first case management hearing once the statement of claim, statement of defence and any replies have been filed. Under the High Court Rules, a judge must make a discovery order unless they consider that the proceeding can be justly disposed of without any discovery. 

Both standard and tailored discovery orders are available. Tailored discovery must be ordered when the interests of justice require more or less discovery than standard discovery would involve. It involves the parties agreeing on certain categories of discovery to be exchanged.

It is also possible for non-party discovery orders to be made against third parties; for example, it is possible that a private party in a damages claim under Section 82 of the Commerce Act could seek a non-party discovery order against the NZCC. If successful, the NZCC may be required to provide any documents for inspection that fall within the ambit of the discovery order (subject to any documents withheld on privilege or confidentiality grounds). Technically, this may include Leniency/Immunity documents, as there is no statutory carve out for such documents. While this has not yet been directly considered by the courts, the courts would likely take into account the public policy implications of requiring disclosure of such documents, but such disclosure could not be ruled out depending on the circumstances. 

Third-Party Access to Documents

Third parties can also apply for access to documents on a court file under the Senior Courts (Access to Court Documents) Rules 2017. In Schenker AG v Commerce Commission & Ors ([2013] NZCA 114), Schenker (under now revoked provisions of the High Court Rules that dealt with access at that time) applied to access documents on the court file in a civil proceeding brought by the NZCC for cartel conduct involving a number of airlines and their air cargo services. Schenker, as a freight forwarder, was involved with a number of the airlines through freight-forwarding contracts but was not party to the NZCC's proceedings. Schenker sought access to the documents on the basis it "may have suffered loss as a result of the alleged conduct" in the air cargo proceedings. The High Court declined the request (which was upheld on appeal) on the basis that the reason for access was "underwhelming" and disclosure was "against the orderly and fair administration of justice and in particular would reverse the confidential basis on which the [information] had been provided". While the Court of Appeal noted that each application for access will ultimately depend on its context, the Court's approach in Schenker may provide some guidance as to how a court may treat a similar non-party application for discovery.

Private parties can also request documents under the OIA but there will be limits on the documents and information that the NZCC will provide as there are a number of potential grounds on which documents may be withheld, for example:

• privacy;
• to protect information which is subject to obligation of confidence; and
• to protect information that would be likely to unreasonably prejudice the commercial position of the person who supplied it.

Pre-action Discovery

There is limited provision for pre-action discovery under Rule 8.20 of the High Court Rules which enables an intending plaintiff to apply for discovery against an intended defendant on the grounds that it is impossible or impracticable for the intending plaintiff to formulate its claim without reference to documents that may be or may have been in the intended defendant's control.

In practice, in pecuniary penalty proceedings brought by the NZCC under Section 80 of the Commerce Act, parties often provide relevant documents to the NZCC (voluntarily or by compulsion) during its investigation.

Documents Provided During NZCC Investigation 

During the investigation stage, the NZCC may ask individuals (including businesses) to supply the NZCC with information voluntarily. Information can include documents, business records, explanations of conduct, witness evidence, and other matters of fact or impression that may be relevant to the NZCC's investigation. The NZCC is also able to issue formal Section 98 notices under the Commerce Act which compel the production of certain documents or information. Unlike a voluntary request, it is a criminal offence to refuse to comply with a compulsory notice without a reasonable excuse. The NZCC is also able to obtain information by conducting in person interviews with potential witnesses and/or defendants (either on a compulsory or voluntary basis).

For disclosure purposes, there is no formal distinction between information provided voluntarily and information provided compulsorily. However, the manner in which the information was obtained may be relevant to the possible grounds for withholding it for disclosure purposes. For example, in respect of a request under the OIA a ground of withholding under Section 9(2)(ba) is: "to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information (i) would be likely to prejudice the supply of similar information, or information from the same source, and it is in the public interest that such information should continue to be supplied […]".

Disclosure in Criminal Cartel Proceedings

Disclosure in criminal cartel proceedings is subject to the Criminal Disclosure Act 2008. After a defendant has pleaded not guilty, the NZCC is required to disclose all relevant information as soon as is reasonably practicable. The NZCC must also provide a list of any relevant information that it refuses to disclose along with the reasons for the refusal. If the defendant requests it, the NZCC must also provide grounds in support of the reason for the refusal (unless the giving of those grounds prejudices the interests protected by the reasons for the refusal and there is no overriding public interest). 

Documents which are privileged are still discoverable but are not required to be made available for inspection in the context of court proceedings. The relevant types of privileges are:

• legal advice privilege (confidential communications between a lawyer (irrespective of the state admitted in or qualification, or whether the lawyer is practising on their own account as a barrister, "in-house" or in a law firm) or client for the purpose of giving or receiving legal advice); 
• litigation privilege (relating to communications between a lawyer and client, or lawyer or client and third party of information compiled or prepared by or at the request of the party or lawyer, where litigation is contemplated – the communication or information must be prepared for the dominant purpose of preparing for a proceeding or an apprehended proceeding); or
• without prejudice communications for settlement negotiations or plea discussions.

Parties are also not required to provide privileged information in response to a voluntary or compulsory request for information by the NZCC. If the NZCC, during an investigation, comes across documents that it considers are privileged, the NZCC's Competition and Consumer Investigation Guidelines ("Investigation Guidelines") set out the process it follows, namely:

• it will provide an opportunity to the provider of that information to claim privilege; 
• where the NZCC disputes a claimed privilege, the NZCC will secure the documents (without further review of them);
• it will provide the party claiming the privilege an opportunity to specify its grounds; 
• it will try to resolve such disputes by agreement; and 
• if the NZCC cannot agree to resolve such disputes, it will refer the matter to the court for its decision.

Leniency and Immunity Generally

Under the NZCC's Cartel Leniency and Immunity Policy, civil leniency means that the NZCC will not take civil enforcement action against a business or individuals for their involvement in the cartel conduct (Leniency). Criminal immunity means that the NZCC may make a recommendation to the Solicitor-General to grant immunity to an applicant whereby no-one can take criminal proceedings in New Zealand against the business or individuals for involvement in the cartel conduct (Immunity). 

Separately, Co-operation Concessions are formal agreements entered into by the NZCC with parties who wish to admit to involvement in cartel conduct and assist the NZCC's investigation. Parties who co-operate with the NZCC will usually be entitled to a discount to any penalty to reflect their assistance.

Information Provided During Leniency or Immunity Process

The NZCC's Cartel Leniency and Immunity Policy (Leniency and Immunity Policy) states it will treat information provided by holders of a marker for Immunity or Leniency, or cooperating parties, as confidential to the extent permitted by law – and where possible, the NZCC will keep confidential the identity of any individual or business that has approached the NZCC about cooperation. There is an exception that the NZCC will not use information provided by a Leniency/Immunity applicant in criminal or civil proceedings against the Leniency/Immunity applicant, except in criminal proceedings filed if the NZCC considers that the applicant has attempted to deceive, or knowingly mislead, the NZCC.

In saying that, in any proceedings before the courts, the NZCC will be required to disclose the fact and identity of any Leniency, Immunity and/or co-operation granted. Further, a grant of Immunity and/or Leniency may become public when the NZCC issues proceedings against other cartel participants, or when officers or employees of a business granted Immunity and/or Leniency give evidence in such proceedings. Similarly, the identity of a co-operating party would be disclosed if the NZCC reaches a settlement agreement with that party and the court imposes a penalty. As set out in 5.1 Disclosure/Discovery Procedure, a third party may apply for a non-party discovery order in respect of information held by the NZCC, including, in theory, Leniency/Immunity materials. 

The NZCC also provides a separate, anonymous whistle-blowing tool which uses encryption methods to allow a person to submit a report of suspected cartel conduct anonymously. The information provided through this online tool cannot be traced back to the submitter, as long as no information that identifies the person is provided to the NZCC.

Evidence of witnesses of fact will be provided in either affidavit or brief of evidence form and will be exchanged prior to the trial. The witness will usually then be required to attend trial and, if they have given their evidence by brief, must read the brief at trial as their evidence-in-chief. Witnesses of fact will also be cross-examined and, if required, re-examined. Parties are able to request subpoenas from the court requiring the attendance of a witness at trial to testify and/or to produce any documents. 

Expert evidence, particularly through the involvement of economists is a significant feature of New Zealand competition law cases. Experts have an overriding duty to assist the court impartially and not to be an advocate for the party that has engaged them.

In the same way as factual witnesses do, expert witnesses will provide their evidence in affidavit or brief of evidence form (which will be exchanged prior to trial). They will also usually be required to attend the hearing, and, if they have given their evidence by brief, must read the brief at trial as their evidence-in-chief. Expert witnesses will also be cross-examined and, if required, re-examined. It is possible for experts to give their evidence by "hot tubbing", whereby all of the experts in a particular area of expertise give their evidence concurrently. Each expert in turn provides a summary of their expert evidence within a time frame, and each other expert may make a comment on that evidence within a time frame (and vice versa). Each expert will in turn be cross-examined, to assess the narrowing of particular issues and allowing experts to better understand each other's positions. 

The Commerce Act permits plaintiffs to seek compensatory and exemplary damages for breaches of the restrictive trade practices and merger control provisions of the Commerce Act. 

Generally, damages are calculated on a compensatory basis; that is, to compensate an applicant for the loss they have suffered as a result of a respondent’s wrongdoing. Whilst the courts are empowered to award exemplary, punitive or aggravated damages, in practice exemplary damages are extremely rare, and to date, the High Court has not awarded exemplary damages under the Commerce Act. There are also extensive statutory restrictions on their application. Exemplary damages are not able to be awarded in relation to conduct for which a person has been convicted of a criminal cartel prohibition.

The availability of the pass-on defence has not been formally determined by the New Zealand courts, and as a result, its status is uncertain. However, as set out in 2.4 Burden and Standard of Proof, there are compelling reasons in support of passing-on arguments and it seems likely a New Zealand court would find they are available. 

New Zealand courts must award interest in every money judgment as compensation for the delay in the payment of money. "Money judgment" is defined broadly in the Interest on Money Claims Act 2016 to mean "a judgment or an order given or made by a court in a civil proceeding that requires the payment of money"; this would include the payment of damages in a damages claim brought under Section 82 of the Commerce Act.

Interest is available both pre-judgment and post-judgment. Interest is calculated at the relevant interest rate using the civil debt interest calculator on the New Zealand Ministry of Justice's website.

Interest is not able to be awarded on a penalty amount, so no interest is payable in restrictive trade practices pecuniary penalty proceedings brought by the NZCC. 

Section 82 of the Commerce Act provides that a person is liable in damages for any loss or damage caused by that person engaging in conduct including when the person has:

• aided, abetted, counselled or procured the contravention;
• been in any way directly or indirectly, knowingly concerned in, or party to, the contravention; or 
• conspired with any other person in the contravention.

The High Court was asked to consider the issue of whether liability was on a joint and several basis in New Zealand Bloom Ltd v Cargolux Airlines International SA ([2015] NZHC 109) where the Court was asked to consider whether Cargolux was liable in damages under Section 82 of the Commerce Act for loss or damage alleged to have been caused by other cartel members. The High Court held that it was not. However, it did leave the door open to an alternative framing of a case in which the conduct in breach of Sections 27(1) and (2) of the Commerce Act (which prohibits contracts, arrangements or understandings having the effect or likely effect of substantially lessening competition in a market) could be said to have "caused" the loss because of Cargolux's "sheer market presence in the air freight industry was such that other carriers followed it into the agreements and gave effect to them."

In New Zealand, there are no limitations on the liability of immunity and leniency applicants to their direct and indirect purchasers and Section 82 of the Commerce Act applies to immunity and leniency applicants.

The Commerce Act does not provide for a claimant to bring contribution proceedings against a third party. 

The Commerce Act expressly allows the courts to grant injunctions to restrain anti-competitive conduct or business acquisitions. Applications may be made by the NZCC or any other person. The court may grant an injunction or an interim injunction which restrains a person from engaging in conduct of a particular kind – whether or not it appears to the court that the person intends to engage in that conduct again, or continues to engage, and whether or not the person has previously engaged in conduct of that nature, and whether or not there is an imminent danger of substantial damage to any person if the person engages in conduct of that nature.   

The courts have previously granted injunctions to restrain anti-competitive conduct; for example, in one case, the court granted an injunction to restrain the defendant from conducting an auction at a particular location during a particular time of year for a certain number of years (NZ Magic Millions Ltd v Wrightson Bloodstock Ltd) following a breach of the Commerce Act. 

Alternative Dispute Resolution

Methods of alternative dispute resolution are available.

The Commerce Act does not prevent competition law disputes arising under the restrictive trade practices prohibition and the anti-competitive business acquisitions prohibition being resolved by arbitration. Disputes arising under the restrictive trade practices prohibition (not involving the NZCC) have in fact been subject to arbitration in New Zealand. For example, in Mobil Oil Corporation v The Queen in the Right of New Zealand ARB/87/2, International Centre for Settlement of Investment Disputes, Washington DC, 4 May 1989, the arbitral tribunal assessed whether there had been a breach of the Commerce Act's prohibition on anti-competitive agreements. Such approach is consistent with the international approach, as competition law disputes have been accepted as arbitrable in the United States, United Kingdom and Europe (often in cases where commercial parties agreed to arbitrate prior to any dispute arising).

However, civil pecuniary penalty proceedings under Section 80 must be determined by the High Court as only a judge is able to impose the pecuniary penalty.

Parties under investigation by the NZCC, or named as defendants in proceedings by the NZCC, may at any time approach the NZCC to make a settlement proposal or to initiate a plea discussion. Such approaches may be made or accepted on a "without prejudice" basis at any point in the investigation process. This means that any concessions or proposals that are discussed will not be used in court if a negotiated settlement cannot be achieved (except for costs purposes in some cases or if privilege were to be waived).

Settlements Can Be "Out-of-Court' or "In‑Court"

Out-of-court settlement may occur during an investigation or where proceedings have not been issued. This would likely involve the NZCC and a party agreeing to terms that do not require the court’s approval to implement. This can include agreement to cease the conduct, admissions of a likely breach of the law, compensation payments, costs paid to the NZCC, publicity, and other terms. 

In-court settlement can occur both before and after proceedings have commenced, in matters where there are settlement terms that require the court’s involvement. For example, the court must be involved where the NZCC wishes to impose a financial penalty as part of the settlement agreement.

The NZCC can also settle with some defendants and not others. In the Lodge v Commerce Commission cartel case, the appellants Lodge Real Estate Ltd and Monarch Real Estate Ltd (and their respective principals) were 2 of 13 real estate agencies that the NZCC had commenced proceedings against for price fixing. Eleven of the real estate agencies ultimately settled with the NZCC and received penalties from the High Court. Lodge and Monarch elected not to settle, and were prosecuted in contested hearings.

Settlements are generally recorded in a formal settlement agreement. Where the settlement is "in-court", the NZCC and parties will give effect to the agreement by presenting the judge with admissions and submissions that are in a form consistent with court procedure.

The NZCC's published guidance provides that it will regard settlements as outcomes that may be publicised unless there are legal or other compelling reasons not to do so. 

Enforceable Undertaking

Section 74A of the Commerce Act enables the NZCC to accept an undertaking given by, or on behalf of, a person in respect of restrictive trade practices. An undertaking may include:

• an undertaking to pay compensation to any person or otherwise take action to avoid, remedy, or mitigate any actual or likely adverse effects arising from a contravention (or possible contravention) of the Commerce Act; and/or
• an undertaking to pay to the NZCC all or part of the NZCC's costs incurred in investigating, or bringing proceedings in relation to a contravention (or possible contravention) of the Commerce Act.

The NZCC is able to seek orders against a party for any breach of an undertaking under Section 74C of the Commerce Act, including:

• an order directing the person to comply with the term;
• an order directing the person to pay to the Crown an amount not exceeding the amount of any financial benefit that the person has obtained (directly or indirectly) and that is reasonably attributable to the breach;
• any order the court thinks appropriate that directs the person to compensate any other person who has suffered loss or damage as a result of the breach; or
• any order for consequential relief the court thinks appropriate.

Private Litigation Funding Available

Private litigation funding is available in New Zealand. While the Court of Appeal has confirmed that the court does not need to give prior approval of funding arrangements, the court nevertheless has a supervisory role over litigation funding arrangements to ensure they do not amount to an abuse of process. 

The Supreme Court has established rules around litigation funding. If an intended representative proceeding is funded, the intended representative plaintiff must disclose that fact to the court and defendant, the identity of the funder, and whether they are amenable to the jurisdiction of the New Zealand courts. A litigation funding agreement may need to be disclosed if the terms of the agreement could be relevant to an application before the court, for example security for costs. 

More recently, the Supreme Court held that there is no expectation to disclose a litigation funding agreement as part of an application for a representative proceeding. In practice, plaintiffs proactively disclose litigation funding agreements (redacted where necessary to protect commercially sensitive information) to provide comfort to the court that there is no abuse of process.

Greater Oversight and Public Class Action Fund Recommended 

The recent Law Commission Report recommendations are broadly consistent with current practice, in that oversight of funding arrangements will remain with the court. It recommended that in all funded proceedings, the plaintiff should disclose their litigation funding agreement to the court and the defendant, and in funded class actions, a litigation funding agreement would only be enforceable by a litigation funder if it is approved by the court. In funded class actions, courts would have to be satisfied that a funding agreement is fair and reasonable, and the representative plaintiff has received independent legal advice. Notably, with the stated aim of improving access to justice, the Law Commission Report recommended the establishment of a public class action fund in cases of public interest.

Costs Generally

Costs are at the discretion of the court but are usually awarded to the successful party. They are usually awarded at the conclusion of the proceedings. Costs are ordered on a scale basis subject to time allocations and rates set out in schedules to the High Court Rules. There is also the ability to apply for increased and indemnity costs but the threshold is high.

In proceedings for pecuniary penalties where the parties have recommended an agreed penalty to the court, the recent trend is that costs generally lie where they fall.

Security for Costs

Defendants are able to apply for security for costs if a judge is satisfied that the plaintiff is:

• resident out of New Zealand;
• a corporation (or subsidiary of a corporation) incorporated outside New Zealand; or
• there is reason to believe a plaintiff will be unable to pay the defendant's costs if the plaintiff is unsuccessful.

A judge then has the discretion to order security for costs (in a sum the judge considers sufficient) if they think it is just in all the circumstances. 

If an order for security of costs is made, a plaintiff is required to:

• pay the sum into court; or
• give, to the satisfaction of the judge or registrar, security for that sum.

The order may stay the proceeding until the sum is paid or the security is given.

The Commerce Act provides for a right of appeal to the High Court against any determinations of the NZCC (except for specified determinations relating to economic regulation). Here, it is also noted that the NZCC has no general power to determine a breach of the Commerce Act or to impose penalties as these are ultimately decisions for the court. Appeals must be made within 20 working days after the date of the determination or within a timeframe that the courts may allow. 

The Commerce Act also provides that any dissatisfied party to an appeal before the High Court may, with leave of the High Court or the Court of Appeal, appeal to the Court of Appeal. Appeals to the Court of Appeal are decided on the record of evidence given in the High Court but the Court makes its own finding on the evidence with due regard to the benefit that the High Court had from hearing witnesses in person. An appeal to the Court of Appeal may be made on a point of law against a decision or order of the High Court and a decision or order of the High Court on an appeal or against a determination of the NZCC. 

A further appeal to the Supreme Court may be granted by way of leave under Section 73 of the Senior Courts Act 2016. The Supreme Court must not give leave to appeal unless it is satisfied that it is necessary in the interests of justice for the Court to hear and determine the proposed appeal, for example if:

• the proposed appeal involves a matter of general or public importance;
• a substantial miscarriage of justice may have occurred or may occur unless the appeal is heard; or
• the appeal involves a matter of general commercial significance.