‘Gardening Club’ freight cartel participant, Kuehne + Nagel, fined $3.1m

Commerce Commission chairman Mark Berry

 Kuehne + Nagel International, the Swiss logistics company, has been fined $3.1 million plus costs for its part in the so-called "Gardening Club" freight forwarding cartel case brought by the Commerce Commission after an investigation begun seven years ago.

Kuehne + Nagel was the last defendant in the case involving six firms, who referred to themselves as the "Gardening Club" and used horticultural code to discuss anti-competitive practices among them.

The regulator's investigation uncovered emails the referred to the agreed surcharges as "the new price for asparagus for the forthcoming season" or "the price of marrows,"

The other five firms admitted to their role and paid penalties in 2010 and 2011. The Swiss firm chose to challenge the regulator's jurisdiction but was unsuccessful in the High Court and Court of Appeal.

Today's fine brings total penalties in the case to $11.95 million "and send a strong message to the business community that cartel behaviour is unacceptable," the commission said in a statement.

In the High Court in Auckland, Kuehne + Nagel admitted to being part of a secret cartel that called itself the Gardening Club which agreed to fix surcharges on air freight forwarding from the UK to countries including New Zealand, the commission said. Cartel members agreed to pass on certain costs to customers rather than compete and set their own pricing.

The Gardening Club was "a classic hard-core cartel" whose members attended secret, offsite meetings outside business hours, using gardening related code words for their agreed surcharges, commission chairman Mark Berry said.

When a member didn't appear to be adhering to the illegal agreement, it was referred to as "operating as a charitable cooperative for the benevolence of vegetable eaters rather than growers," Berry said.

"This case involves deliberate and secretive conduct by the freight forwarding companies, but it's important for businesses to recognise that cartels can also take on a less obvious form, like a conversation about pricing at a trade association meeting or a nod and a wink between competitors not to discount a certain product," Berry said.

(BusinessDesk)

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