An Auckland construction company, the second to be sentenced in New Zealand’s first criminal prosecution for cartel conduct, has escaped more than half a million dollars in fines after the High Court accepted it lacked the financial capacity to pay.
The company, which continues to have interim name suppression, was fined $30,000 on Thursday for its role in bid-rigging two major transport infrastructure projects, the Northern Corridor Improvement Project (NCIP) and Auckland Transport’s Middlemore Bridge Project, in 2022. RNZ reported.
The firm had pleaded guilty last month to engaging in cartel behaviour after agreeing to submit higher bids so that another construction firm, MaxBuild, could secure contracts.
In December 2024, MaxBuild director Munesh “Max” Kumar was sentenced to six months’ community detention, 200 hours’ community work, and his company was fined $500,000, reported RNZ.
During sentencing, Justice Sally Fitzgerald said while Kumar was the “instigator” in both instances, the unnamed company was an “active participant” in collusive conduct that undermined competition, as reported by RNZ.
“The practice of cover-pricing is harmful in its potential to reduce competition, increase prices, and diminish confidence in the tendering process,” Justice Fitzgerald said, RNZ reported.
The judge adopted a starting point of $700,000, allowing discounts for the company’s guilty plea and lack of prior convictions, which brought the total to $595,000. However, due to the company’s poor financial situation, including a $19,000 bank overdraft and the fact that it is no longer trading, the fine was reduced to $30,000, deemed the upper limit of its ability to pay.
Justice Fitzgerald said that while the company’s culpability was slightly lower than MaxBuild’s, “I don’t see it as so much lower.” She added that had the company been financially viable, the larger fine would have served as a deterrent.
The Commerce Commission began investigating the case in April 2022, after an employee of the company accidentally emailed a spreadsheet to a joint venture overseeing the NCIP that exposed pricing agreements with MaxBuild.
Subsequent search warrants at several commercial and residential properties revealed further evidence of collusion in the Middlemore Bridge project.
Commission Chair John Small said the case set an important precedent and reaffirmed the agency’s commitment to combating cartel behaviour.
As quoted by RNZ, “Cartel detection and enforcement are a priority for the Commission, particularly where taxpayer-funded projects are involved,” Small said.
“Where we suspect businesses and individuals are cheating the system, we will take action against the conspirators.”
Small added that “cover-pricing”, the practice of submitting inflated bids to favour competitors, was being detected more often and that the Commission was working to educate procurers on identifying and preventing such conduct.
This case marks a milestone in New Zealand’s efforts to criminalise and deter cartel activity, reinforcing that financial hardship will not shield offenders from accountability.