In October 2022, the Commerce Commission warned eight freight forwarding companies for likely engaging in cartel conduct.  This highlights the need for businesses to take care when entering into a supplier/customer relationship with competitors.

The warnings related to conduct that occurred between 2014 and 2018.  At that time, the eight companies engaged Mondiale Freight Services Limited and Oceanbridge Shipping Limited to provide wholesale freight forwarding services.  These services included, for example, a company combining its customers’ freight with that of Mondiale or Oceanbridge, for the sake of efficiency, if the company did not have a full container of freight.

Given the eight companies were also in competition with Mondiale and Oceanbridge, they were concerned Mondiale and Oceanbridge would learn confidential and commercially sensitive information regarding the companies’ customers.  To protect against this, the companies entered into arrangements with Mondiale and Oceanbridge not to compete for each other’s customers. This included:

• Refusing to quote for the other party’s customers
• Apologising to the other party when the other party’s customers were approached, and
• Discussing the amount a party should quote the other party’s customers to ensure the price would not be competitive.

The commission considered these arrangements likely amounted to cartel conduct and went further than necessary to protect the companies’ confidential and commercially sensitive information.

In June 2022, Mondiale and Oceanbridge were fined almost $10 million combined for their involvement.  The commission decided on a warning for the eight companies given they had significantly less market and negotiating power.

All businesses entering into a supplier/customer relationship with a competitor should ensure the arrangement does not breach their obligations under the Commerce Act 1986.  If you are concerned about any of your contracts don’t hessitate to contact us.