In general terms, the Commission:
- tests all information supplied including, where necessary, seeking independent expert advice;
- observes the rules of natural justice;
- makes timely decisions; and
- communicates determinations clearly by publishing them.
Applications for determinations
Any person who has an unresolved dispute with Fonterra about the application of Subpart 5 of Part 2 of the DIR Act, or any regulations made under section 115 of the DIR Act, may apply to the Commission for a determination. The application must be made in writing and be on the Commission's prescribed form. The application must also be accompanied by an application fee of $500 plus GST.
An application must be made within three years after the matter giving rise to the dispute arises.
The Commission is able to amalgamate related applications and consider them together.
The Commission is able to reject any application where it considers that:
- the dispute is not genuine, or is vexatious or frivolous;
- the applicant does not have a direct financial interest in the matter;
- the applicant has not made a reasonable attempt to settle the matter with Fonterra; or
- the Commission has made a determination or is currently considering an application for determination on the same issue.
The Commission is required to notify Fonterra of the application for determination, provide Fonterra with a copy of the application and seek comment from Fonterra on that application. The Commission must specify a date by which comments must be provided. This must be no later than 10 working days after Fonterra is notified of the application. The Commission must then decide whether to make a determination within 10 working days after the date that Fonterra is required to provide comment. In making this decision, the DIR Act requires the Commission to consider the purpose of Subpart 5 of Part 2, which is defined in section 70 as being to promote the efficient operation of dairy markets in New Zealand. In addition, the Commission must consider the principles set out in section 71 of the DIR Act.
Process for making determinations
The Commission may conduct its investigation in any manner it considers appropriate. This could include seeking submissions from other interested parties, obtaining independent technical advice and conducting conferences. If the Commission were to decide to conduct a public conference, it would issue a draft determination and seek submissions from all interested parties prior to the conference.
Clearly, the applicant will need to provide the Commission with factual information about the issue for which the determination is being sought. However, the responsibility for obtaining additional information, including independent expert opinions will rest with the Commission, although, if an applicant wishes to obtain their own expert advice, they are entitled to do so.
The parties to any determination will bear their own costs with the exception that if the Commission considers that a party has unreasonably contributed to another's costs, the Commission may direct that party to meet some or all of the costs of the other party.
There is no specific timeframe for the completion of determinations, other than a requirement to complete them as soon as practicable. However, the Commission is likely to be constrained by key industry dates such as the application period and the commencement of the milk supply season. Clearly, applications relating to Fonterra's refusal to accept new suppliers should be completed prior to the beginning of the season.
Applicants can withdraw their application at any stage by written notice to the Commission. The Commission must then notify the affected parties of the withdrawal and do no more in relation to the application. The Commission may require a party to meet some of the costs related to the application as explained above.
Determinations
Commission determinations may be appealed to the High Court on a matter of law. Any determination continues to have effect until any legal proceedings are finally disposed of.
A determination must:
- state the Commission's decision on the matters in dispute;
- state clearly whether a breach of Subpart 5 of Part 2 or the regulations made under section 115 of the DIR Act has occurred;
- include the reasons for the determination;
- include the terms and conditions on which the determination is made; and
- specify the actions that a party to a determination must do or refrain from doing, which may include (without limitation) payment of compensation by one party to another.
The Commission may also specify an expiry date for the determination.
A determination is enforceable in the High Court. Any party to a determination may apply to the Commission for the determination to be amended or reconsidered.
Enforcement investigations
The Commission may initiate an investigation into an alleged breach of Subpart 5 of Part 2 of the DIR Act or any allegation of a breach of the Commerce Act 1986 or Fair Trading Act 1986 either as a result of a complaint or as a result of its own monitoring activities.
Complaints about conduct that appears to breach any of these statutes can be made to the Commission either in person, or by telephone, facsimile, e-mail or letter.
Once an investigation has concluded, and a breach has been found, the Commission has a number of enforcement options available to it to assist in achieving compliance with the legislation. The Commission may:
- issue a warning;
- negotiate an administrative settlement with the party or parties; or
- take penalty action (including seeking an injunction through the courts).
Every breach will involve different circumstances, and the enforcement option taken will be chosen with that in mind. In all cases, however, the Commission's primary goal will be to achieve compliance with the relevant legislation that the Commission enforces.
Under the Commerce Act and the DIR Act, penalties are set at a maximum of:
- for an individual, $500,000; and
- for a body corporate, the greater of $10 million or three times the illegal gain (or if the illegal gain cannot be ascertained, 10 per cent of the turnover in New Zealand of the body corporate and all of its interconnected bodies corporate).
Commission's information gathering powers
The Commission will have access to all of the information gathering powers it has under the Commerce Act, when undertaking its role under the DIR Act. These powers include the:
- ability to obtain and execute search warrants;
- power to requisition information and documents from any person;
- power to order any person to appear before the Commission to give evidence; and
- ability to take evidence on oath.
How to contact us
Complaints about conduct which appears to breach the DIR Act or the Raw Milk Regulations can be made to the Commerce Commission.
