Price fixing costly for firm
Elders Rural Holdings, which is no longer trading, has been ordered to pay $200,000 in penalties for its part in a price fixing agreement involving livestock tracing.
Elders Australian parent company, Elders Ltd, has agreed to pay the sum towards the Commerce Commission’s investigation costs.
The settlement reflected the fact Elders was no longer trading. The case dates back to 2012, and follows a Northland farmer lodging a complaint over price fixing.
The Commerce Commission took PGG Wrightson (PGW), Elders, Rural Livestock and other members of the New Zealand Stock and Station Agents’ Association to court after they set new fees to implement the Government’s National Animal Identification Tracing (Nait) system.
The system allows livestock to be traced in the event of a disease outbreak such as foot and mouth, or the Mycoplasma bovis bacteria recently detected in South Canterbury and North Otago.
In 2015 Auckland High Court judged there had been an anticompetitive agreement struck between the companies.
PGW and Rural Livestock were fined $2.7 million and $475,000 respectively after admitting their conduct in the case. PGG Wrightson also agreed to pay $50,000 towards the commission’s investigation costs.
Last year four current or former employees of PGWand one former employee of Elders were ordered to pay $105,000 worth of penalties for price fixing.
Elders ceased trading in July 2014 when it sold its livestock business to an unrelated third party, but the commission and Elders agreed to seek a declaration from the court that Elders breached the price fixing provisions of the Commerce Act.
At a hearing at the High Court at Auckland earlier this month, Elders admitted it was involved in three anti-competitive agreements with PGG Wrightson Ltd, Rural Livestock Ltd, and other members of the New Zealand Stock and Station Agents’ Association.
The agreements were that: Saleyards would charge a minimum fee of $25 to tag cattle, and $10 for any calves, presented to a saleyard without the ear tag required by the Nait Act. Agents would pass the fee on to farmers;
Agents would charge farmers a radio frequency identification device (RFID) administration fee of $1.50 per head of cattle (split equally between the seller and buyer), to register saleyard based cattle movements;
Saleyards would increase existing yard fees by $1.50 per head of cattle (split equally between the seller and buyer). Justice Patricia Courtney noted that none of the individuals involved, including those in senior management positions, seemed to realise the potential implications of their conduct.
‘‘Despite the element of deliberateness in the agreements, there was no intention to contravene the Act and no secrecy about the agreements reached.‘‘
Commerce Commission chairman Dr Mark Berry said the livestock companies should have decided independently how to respond to the new law, instead of colluding on fees to the detriment of farmers.