Couriers ordered to pay $1.225 million after investigation into cartel conduct
An investigation by the Commerce Commission has resulted in courier companies Aramex and GoSweetSpot (GSS) being penalised $700,000 and $525,000, respectively, by the High Court for engaging in cartel conduct.
Additonally, nine courier services businesses will soon be issued warnings for conduct the Commission believes likely constitutes cartel conduct in breach of the Commerce Act.
The penalties against Aramex and GSS follow separate hearings at the Auckland High Court. The two companies did not enter into the agreements containing cartel provisions with each other.
“The courier industry plays a critical strategic role in New Zealand’s economy, given the importance of transport for the movement of goods,” Commerce Commission Chair Dr John Small says.
“However, the freight and courier sector has been an area of ongoing concern and focus for us, with the Commission taking five court cases in the last 15 years.
“We expect these penalties and warnings to bring about a change of behaviour in the courier sector.”
Last year, Aramex admitted to entering into and giving effect to a contractual arrangement that allocated customers and fixed prices between itself and another competitor in the courier services market.
Separately, GSS admitted to entering into and giving effect to contractual arrangements that allocated customers between itself and another competitor in the courier services market.
Dr Small says it is vital the courier sector remains highly competitive and free of these behind-closed-doors agreements, which ultimately hurt Kiwi consumers.
"Stamping out cartel conduct is an enforcement priority for the Commission - this outcome sends a strong message that it will not be tolerated,” he says.
“Companies engaging in cartel conduct should expect to be on the receiving end of enforcement action.”
Aramex is a carrier that provides courier transportation services to customers, while GSS is a reseller that brokers courier transportation services to customers.
Both contractual arrangements at issue here were negotiated in the context of reseller/carrier arrangements.
The Commission and each of the parties agreed settlements to resolve the proceedings prior to the penalty hearings.
The Commission is unable to make further comment on the warnings at this time. Further information will be available on the case register in due course.
Background
What is a cartel?
A cartel is where two or more businesses agree not to compete with each other including by price fixing, allocating markets or customers, rigging bids, or restricting the output or acquisition of goods and services.
More information, including on allocating customers and fixing prices, can be found on our website.
Because cartel members make more profit than they would if they competed fairly, goods and services become more expensive, consumers end up with fewer choices, and quality and service levels are likely to deteriorate. Tackling cartels is one of the Commission’s enforcement priorities.
The Commerce Act
Cartel conduct is prohibited under section 30 of the Commerce Act. As of 8 April 2021, cartel conduct became punishable with a term of imprisonment of up to 7 years, underlying just how serious and harmful offending of this nature can be.
Section 31 and 32 outline exceptions to the cartel prohibition, for vertical supply and collaborative activity arrangements.
Courier services
Courier services involve all aspects of the logistical arrangements necessary to collect and deliver parcels in New Zealand by road, rail, air and/or sea. Courier services are offered for the purpose of transporting parcels from one business to another, from businesses to their customers, or from one individual to another.
Suppliers of courier services operate using different business models. They include carriers who have operational control over transportation assets that physically handle goods, for pick up and/or delivery within New Zealand. They also include resellers, sometimes known as “brokers”, who contract with carriers to provide courier services to customers.