This article, originally published on 9 April 2025, has been revised to reflect the sentencing of a second company for criminal cartel conduct by the High Court on 23 October 2025 and to include additional context on the Commerce Commission’s ongoing criminal enforcement actions.
New Zealand’s first criminal sentence for cartel conduct highlights the serious consequences that may follow for businesses and individuals who engage in cartel behaviour.
In December 2024, the High Court imposed New Zealand’s first criminal sentence for cartel conduct under the Commerce Act 1986. The decision marks a significant milestone in the enforcement of competition law in New Zealand and highlights the serious consequences that may follow for businesses and individuals who engage in cartel behaviour. On 23 October 2025, the High Court sentenced a second construction company for related bid-rigging conduct.
The Commerce Commission included cartel conduct in its list of priorities for 2024/2025, stating:
“We will prioritise cartel conduct which impacts the competitive process for the procurement of public services and infrastructure contracts. We will take action in this area. Protecting the integrity of processes concerning the expenditure of public funds is essential.”
It was therefore no surprise that the Commerce Commission recently took action against a company and its director for cartel conduct with those exact features, culminating in the High Court imposing New Zealand’s first ever criminal sentence for cartel conduct under the Commerce Act 1986 (Commerce Act) in December 2024.
The message for both companies and directors to take away from this case is that cartel conduct will be taken very seriously by both the Commerce Commission and the High Court, and can result in significant sanctions, including large fines, up to seven years imprisonment and community service. It is therefore essential that companies and directors understand their obligations under the Commerce Act, especially regarding cartel conduct, and ensure that effective education and training is implemented within their companies.
For an overview of the cartel provisions in the Commerce Act and our recommendations on what businesses can do to protect themselves, please see our previous article. Otherwise, read on to find out more about the case.
MAXBUILD’S AND KUMAR’S CRIMINAL CONDUCT
During the period from January to May 2022, MaxBuild and Kumar engaged in cartel conduct known as ‘cover pricing’ (a form of illegal bid-rigging). Driven by financial difficulties, on two separate occasions they agreed with a competitor to rig bids for public infrastructure projects.
In early 2022, Kumar agreed with the competitor’s director that the competitor would bid higher than MaxBuild to ensure that MaxBuild was awarded the contract for the Northern Corridor Improvement Project. Other companies were invited to bid but only MaxBuild and the competitor placed bids. MaxBuild was awarded the contract and inflated its profit margins. Later in 2022, having been rejected for the Middlemore Bridge Project, Kumar agreed with the competitor’s director that the competitor would bid higher for that project than MaxBuild.
However, before this agreement could progress, the competitor’s estimator inadvertently emailed a spreadsheet to the principal contractor, containing MaxBuild’s prices and how the competitor had used them to calculate its own prices. The estimator tried unsuccessfully to recall the email. Staff of the principal contractor who received the email reported it to the Commerce Commission, which then began investigating. This ultimately led to charges being filed against MaxBuild and Kumar, with each party facing two charges for entering into a contract or arrangement, or arriving at an understanding, that contains a cartel provision, and two representative charges of giving effect to a cartel provision.
SECOND COMPANY’S CRIMINAL CONDUCT
A second construction company involved in the same conduct pleaded guilty in September 2025 to charges of cartel conduct in relation to the Northern Corridor Improvement Project and Auckland Transport’s Middlemore Bridge project. The company originally received interim name suppression, but that lapsed leading to its identification as Mardom Limited.
Mardom’s director was originally charged, but the Commerce Commission withdrew the charges due to his ill health and the company’s guilty plea.
Justice Sally Fitzgerald noted that while Kumar was the instigator, Mardom was an active participant in agreeing to Kumar’s requests. In both projects, Kumar approached the company’s director to submit a higher bid so that MaxBuild could win the contracts. Although Mardom did not directly profit from the conduct, the Court accepted that submitting the bids allowed it to preserve commercial relationships and improve its prospects of being invited to tender for future work.
SENTENCING AND FACTORS CONSIDERED
The High Court considered various aggravating and mitigating factors of the case. The High Court noted that the most aggravating factors were the serious and deliberate nature of Kumar’s conduct, the level of control that Kumar personally exercised, and that the projects were publicly funded. Additional aggravating factors included that there were multiple occurrences and that the conduct would have continued if it had not been discovered. However, there were also numerous mitigating factors considered, such as the financial position of the company and Kumar pleading guilty, having no criminal convictions, expressing remorse and cooperating with authorities.
The High Court emphasised the seriousness of the offending and the need to deter similar conduct. Justice Wilkinson-Smith noted that the sentences were kept low to reserve harsher penalties for more serious offending in future. However, the High Court also interpreted the criminalisation of cartel conduct to be a message from Parliament that penalties for cartel conduct need to be more significant than a fine. MaxBuild was ordered to pay a fine of $500,000 and Kumar was sentenced to 6 months’ community detention (a sentence involving a curfew with limited monitoring during set hours) and 200 hours community service.
For Mardom, Justice Fitzgerald determined that its culpability was lower than MaxBuild’s, but “not so much lower.” She adopted a starting point of a $700,000 fine, referencing the $1 million starting point applied to MaxBuild. A 5% discount was applied for the company’s lack of prior convictions and a further 10% for its guilty plea, resulting in a notional fine of $595,000. After considering the company’s inability to pay, its inactive trading status, and its negative financial position, the fine was reduced to $30,000. This was the upper limit of what both the Crown and defence accepted the company could afford. The company is no longer trading, and its bank account was $19,000 in overdraft at the time of sentencing.
In sentencing, Justice Fitzgerald described cartel conduct, in this case in the form of bid-rigging, as inherently deceptive, hidden from the customer and difficult to detect. She said Mardom took active steps in the collusive behaviour and that, but for its involvement, the conduct could not have occurred. Justice Fitzgerald added that the practice of cover pricing was harmful in its potential to reduce competition, increase prices, reduce quality of services, and undermine confidence in public procurement processes. The Judge said the higher fine would have served as a deterrent.
With the Court having accepted as an aggravating factor the fact that the bid was for a public contract, businesses should be wary when tendering for public contracts to ensure that their team fully understands the rules and what is required of them to comply with competition laws.
The Commerce Commission Chair, Dr John Small, said the case sets an important precedent and reaffirmed that cartel detection and enforcement remain a priority, particularly where taxpayer-funded projects are affected. He added that cover pricing is being detected more often and that the Commission continues to educate procurers and construction businesses about bid-rigging risks. He commented that “where we suspect businesses and individuals are cheating the system by committing these crimes, we will take action against the conspirators.”
FURTHER INFORMATION
For further information please see our previous article. The Commerce Commission also has more general information and resources available here.
If you would like to know more, please contact your usual Jackson Russell Business Law advisor or one of our Business Law team below. We have multiple resources available to help you to understand cartel and competition laws, and we can help train your team.
