The Christchurch High Court has imposed penalties against cleaning company Canterbury Industrial Scrubbing (CI Scrubbing) for its role in a long-standing cartel agreement with a competitor.
A Commerce Commission investigation found that the cleaning cartel ran for nearly two decades with CI Scrubbing and another industrial cleaning company agreeing that CI Scrubbing would only offer industrial scrubbing services, while the other would only offer industrial sweeping services.
When the other company tried to get out of the scheme, CI Scrubbing Director Daniel Jamieson threatened to target their customer base in order to get them to continue.
A cartel is where two or more businesses agree not to compete with each other by price fixing, allocating markets or customers, or restricting the output or acquisition of goods and services.
After the cartel broke down, customers noticed that prices dropped by up to 30% in some cases.
The judge found that the long duration of the scheme was a “clear aggravating factor” in the case, and that Jamieson’s commercial threats amounted to a “serious breach” of the law.
In normal circumstances a penalty of between $750,000 and $1.25 million would have been appropriate for CI Scrubbing’s conduct, and $50,000 to $70,000 for Jamieson.
However, due to their financial circumstances and co-operation in the investigation, CI Scrubbing was fined $51,000, with other declarations made with respect to Jamieson.