Aramex and GoSweetSpot (GSS) have been fined $700,000 and $525,000 respectively by the Auckland High Court in New Zealand for engaging in cartel conduct.
The two courier companies did not enter into the agreements containing cartel provisions with each other, but with other parties.
Both companies offer services to a wide range of industries, including retailers and those within the apparel and footwear space.
Aramex lists on its NZ website that Rebel Sport is a key client, alongside the likes of homewares retailer Briscoe and national bookstore The Nile. The company reports over 75,000 clients, both large and small in scale.
GSS, meanwhile, reports on its website that it does business with over 10,000 small and medium sized businesses.
The recent court case in the Auckland High Court was brought forward following an investigation by the Commerce Commission. The Commission also noted that nine other courier services businesses will soon be issued warnings for conduct that it believes likely constitutes cartel conduct in breach of the Commerce Act.
A cartel is where two or more businesses agree not to compete with each other including by price fixing, allocating markets or customers, rigging bids, or restricting the output or acquisition of goods and services.
According to the Commerce Commission, because cartel members make more profit than they would if they competed fairly, goods and services become more expensive, consumers end up with fewer choices, and quality and service levels are likely to deteriorate.
The penalties against Aramex and GSS follow separate hearings at the Auckland High Court.
“The courier industry plays a critical strategic role in New Zealand’s economy, given the importance of transport for the movement of goods,” Commerce Commission chair Dr John Small said.
“However, the freight and courier sector has been an area of ongoing concern and focus for us, with the Commission taking five court cases in the last 15 years.
“We expect these penalties and warnings to bring about a change of behaviour in the courier sector.”
Last year, Aramex admitted to entering into and giving effect to a contractual arrangement that allocated customers and fixed prices between itself and another competitor in the courier services market.
Separately, GSS admitted to entering into and giving effect to contractual arrangements that allocated customers between itself and another competitor in the courier services market.
Dr Small said it is vital the courier sector remains highly competitive and free of these behind-closed-doors agreements, which ultimately hurt Kiwi consumers.
"Stamping out cartel conduct is an enforcement priority for the Commission – this outcome sends a strong message that it will not be tolerated,” he said.
“Companies engaging in cartel conduct should expect to be on the receiving end of enforcement action.”
Aramex is a carrier that provides courier transportation services to customers, while GSS is a reseller that brokers courier transportation services to customers.
Both contractual arrangements at issue here were negotiated in the context of reseller/carrier arrangements.
The Commission and each of the parties agreed settlements to resolve the proceedings prior to the penalty hearings.