The decision of the New Zealand Supreme Court in Lodge Real Estate Ltd. v. Commerce Commission
was decided in 2020,
shortly after The Evolution of Competition Law in New Zealand went to press. It
is the first cartel decision by New Zealand’s highest court since the enactment of the Commerce Act
The decision in Lodge offers a New Zealand perspective on the concept of a price-fix ing
agreement and imperfect collusion. An examination of the case also highlights some of distinctive
features of competition law in New Zealand.
Naked price-fixing cartels permit competitors to coordinate their conduct in a manner that reduces
market performance. They are prohibited in most jurisdictions without the need for proof of harm to
competition in a market because price-fixing virtually always result in higher prices and allocative effi-
ciency losses. However, neither reduced output nor price rises are perfect indicators of either the presence
or absence of harmful cartel conduct.
Cartels are also often imperfect. Price-fixing agreements may be
patchily implemented and many cartels survive episodes of cheating. Cartel agreements usually do not
cover all of the variables on which the cartel members compete and may only regulate one component of
price of the good or service the subject of the cartel. Demonstrating that imperfect collusion has or is likely
to raise price or reduce output may not always be possible. If proof of these effects was required,
enforcement of the prohibition on price-fixing would be more expensive and less effective.
The courts have generally approached imperfect price-fixing arrangements in a pragmatic manner,
borrowing from rather than being overly restrained by economics. Both the United States and the European
Union courts have reasoned by analogy from established categories of cartel agreements to prohibit a range
of agreements that may affect price in one way or another. Agreements on the price of a component of the
overall price of a product, discounts, credit, and rebates are prohibited as species of price-fixing—partial
price-fixing. More recent decisions may be anchored in older precedents that appear to reflect a concern for
the protection of competition as a process more than economic efficiency. In New Zealand, the courts are
required to interpret statutory language on price-fixing borrowed from Australia in the 1980s, which was in
turned derived from an understanding of United States pricing fixing law of the early 1970s. Competition
cases from both jurisdictions are often cited in the New Zealand courts.
Economics does not offer a complete account of cartel conduct. Demanding price-fixing law follow
the contours of economic theory would likely result in many false negatives; in the sense that agree-
ments reducing competition without any corresponding social gain from collaboration would be
permitted. If an arrangement must be shown to have the purpose or likely effect of raising price or
reducing output to fall within a per se price-fixing prohibition,
the prohibition of many forms of naked
partial price-fixing and semi-collusion may escape the per se rule. In this regard, a tension exists
1. Lodge Real Estate Ltd. v. Commerce Commission  NZSC 25.
2. Poynter v. Commerce Commission  NZSC 38 considered jurisdiction over cross-border cartels. Discussed in Chris
Noonan, Bad Poynter: International Cartels and Territorial Jurisdiction,19N
EW ZEALAND BUS. L.Q. 138 (2013). Sections 4
and 90 of the Commerce Act were amended in response.
3. See Alaska Electrical Pension Fund v. Bank of Am. Corp., 175 F. Supp. 3d 44, 57 (S.D.N.Y. 2016) (rejecting argument that a
cooperation arrangement that increased supply cannot be price-fixing). Some cartels expand output: Werner Troeskin, A Note
on the Efficacy of the German Steel and Coal Syndicates,18E
XPLORATIONS ECON.HIST. 595 (1989); Janice R. Kinghorn,
Kartells and Cartel Theory: Evidence from Early Twentieth Century German Coal, Iron and Steel Industries,14E
ECON.&BUS.HIST. 339 (1996); Lars-Hendrik Ro¨ller & Frode Steen, On the Workings of a Cartel: Evidence from the
Norwegian Cement Industry,96A
M.ECON.REV. 321 (2006).
4. See Vogel v. American Soc. of Appraisers, 744 F. 2d 598, 601 (7th Cir. 1984), where Judge Posner said: “In general, the only
types of horizontal price agreements that the antitrust laws have been held to forbid are those that have the purpose or likely
effect of raising price above the competitive level.” The only exceptions the judge admitted were monopsony and maximum
price agreements, and the merits of the latter exception were questioned. See also Clamp-All Corp. v. Cast Iron Soil Pipe
Institute, 851 F. 2d 478, 485 (1st Cir. 1988), where Judge Breyer justified the prohibition of basing point pricing because such
practices reduce cheating and stabilize a cartel.
482 The Antitrust Bulletin 66(4)