Chapter 2
Civil pecuniary penalties in New Zealand and the scope of our review

Use of civil pecuniary penalties

2.10The vast majority of civil pecuniary penalties have been sought and imposed under the Commerce Act 1986. Most of these have been resolved by an admission of liability by the defendant and an agreement between the defendant and the Commerce Commission as to the level of penalty which should be imposed. Such agreements must be approved by the High Court. More than 50 substantive penalty proceedings have been commenced since the first penalty was imposed in 1990.30  The penalty in that case, imposed for restrictive trade practices, amounted to $5 per defendant. The highest penalty imposed, also for restrictive trade practices, was against Telecom New Zealand in 2011 and was set at $12m.31  The vast majority of the Commerce Act penalties have been imposed on corporate bodies rather than individuals. The table below shows the number and size of penalties imposed under the Commerce Act since 2006:32
Year Number of penalties imposed Total monetary amount of penalties
06/07 7 $6.07m
07/08 0
08/09 1 $1.05m
09/10 0
10/11 10 $35.05m
2.11By comparison, civil pecuniary penalties have formed a minimal part of the enforcement of the Securities Act 1978 and the Securities Markets Act 1988. Both those Acts are also enforced by way of criminal offences (unlike the bulk of the Commerce Act), and up until 2002 civil penalty proceedings for insider trading under the Securities Markets Act were instituted by the issuer of the security, not the Securities Commission.33 New Zealand’s securities law will be overhauled on the passing of the Financial Markets Conduct Bill.34  It will introduce considerably more civil pecuniary penalty provisions in this area.
2.12The Overseas Investment Act 2005 civil pecuniary penalties have been sought very rarely.35  Three civil pecuniary penalties have been imposed under the UEM Act, totalling $250,000. Those penalties were imposed against individuals.36  The Department of Internal Affairs, which enforces the Act, has commenced two further proceedings in 201137  and 2012.38
2.13Although the HSNO Act, Dairy Industry Restructuring Act 2001, and the Telecommunications Act 2001 civil pecuniary penalty provisions have been in place for some time, no penalties have been sought under those Acts. The HSNO Act penalties target breaches related to “new organisms”. We understand that there have been no full approvals for release of new organisms from research facilities, and no penalties have been imposed. The relevant provisions of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 are not in force.39
30Commerce Commission v Otago and Southland Vegetable and Produce Growers’ Association (Inc) (1990) 4 TCLR 14 (HC).
31Commerce Commission v Telecom Corporation of New Zealand Ltd HC Auckland CIV-2004-404-1333, 19 April 2011; upheld by the Court of Appeal in Telecom Corporation of New Zealand Ltd v Commerce Commission [2012] NZCA 344.
32Email from Rebecca McAtamney (Chief Adviser, Competition, Commerce Commission) to Susan Hall (Law Commission) (25 November 2011).
33J Diplock and L Longdin “The Journey Towards Effective Insider Trading Regulation in New Zealand” (2007) 13 NZBLQ 290 at 295.
34Above, n 24.
35The Overseas Investment Office reports that they have been sought “perhaps 4 times”. See email from Annelies McClure (Manager, Overseas Investment Office) to Susan Hall (Law Commission) (18 November 2011).
36Department of Internal Affairs v Atkinson HC Christchurch CIV-2008-409-2391, 19 December 2008.
37Anti-Spam Compliance Unit, Department of Internal Affairs “High Court action against alleged spammer” (press release, 17 February 2011).
38Anti-Spam Compliance Unit, Department of Internal Affairs “Internal Affairs takes action against spammer” (press release, 22 April 2012).
39They come into force on 30 June 2013: Anti-Money Laundering and Countering Financing of Terrorism Act Commencement Order 2011.