Commission files proceedings against alleged taxi cartel

The Commerce Commission has filed proceedings at the High Court in Wellington against Hutt and City Taxis Limited (Hutt & City) for alleged price fixing.

The Commission alleges Hutt & City contravened the Commerce Act by reaching a price-fixing agreement with two competing taxi companies to implement a minimum charge of $25 for pick-up taxi trips from the on-demand taxi rank at Wellington Airport.

The Commission alleges the agreement was reached in September 2020, following initial discussions in previous years, and that it took effect in October 2020. It’s alleged the fare was implemented through the distribution of stickers displaying the minimum charge to be placed on taxi vehicles. The conduct ceased in November 2020, after the Commission began investigating.

The Commission also alleges Hutt & City attempted to reach the same price-fixing agreement with a third taxi company.

The Commission is seeking a declaration that Hutt & City contravened, and attempted to contravene, the Commerce Act, along with financial penalties and costs.

The Commission has also issued warnings to four former directors of Hutt & City over their role in the conduct:

* Mr Rahid Amin

* Mr Sathishkumar Dharndapani

* Mr Dharmendra Krishnan, and

* Mr Paul Swain.

In the Commission’s view, the four former directors of Hutt & City likely have accessory liability for Hutt & City’s alleged contravention of the Commerce Act.

A warning has also been issued to a separate company Kiwi Cabs Limited (Kiwi Cabs), over its role in the conduct.

“Cartel conduct harms consumers by preventing businesses from competing to provide better quality services at better prices, and it harms other businesses which are trying to compete fairly,” said Commerce Commission Chair Anna Rawlings.

“It is important that businesses and their directors are aware of the seriousness of this kind of conduct, and ensure they understand how to stay on the right side of the law.”

Cartel conduct is now punishable with a term of imprisonment of up to 7 years, underlying just how serious and harmful offending of this nature can be. Conduct which occurred before 8 April 2021, like the alleged conduct in this case, is not subject to these new penalties.

Copies of the warning letters can be found on the Commission’s website.

As this case is now before the Court, the Commission cannot comment further at this time.

Background

Hutt and City Taxis Limited

Hutt & City is a taxi company operating in Wellington, with a significant presence in the Hutt Valley.

Warning letters

A warning letter explains the Commission’s opinion that the conduct at issue is likely to have breached the law. It is not a finding of non-compliance – only the Courts can decide whether a breach of the law has occurred.

The purpose of a warning letter is to inform the recipients of the Commission’s view that there has likely been a breach of the law, to suggest a change in the recipient’s behaviour and to encourage future compliance with the law.

Cartel Criminalisation

As of 8 March 2021, cartel conduct is now punishable by a maximum penalty of a term of imprisonment of up to 7 years, after the Commerce (Criminalisation of Cartels) Amendment Act 2019 came into effect.

Cartel conduct includes price fixing, market allocation and bid rigging.

Individuals can be fined up to $500,000 and, as noted above, may now be subject to a term of imprisonment. Companies can be fined up to $10 million, three times commercial gain or 10% of turnover per year per breach.

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