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Supplier warned about anti-competitive conduct

10 July 2006/004

Safety supplier warned about anti-competitive conduct

The Commerce Commission has warned Wesfarmers Industrial and Safety New Zealand Limited that its alleged attempt to stop other businesses from supplying safety products to its competitor risked breaching section 27 of the Commerce Act.

In December 2004, three Wesfarmers employees sent emails to various suppliers of Wesfarmers, discouraging them from supplying Amare Safety as it tried to enter the New Zealand market.

Wesfarmers and Amare compete with each other in the retail of industrial safety equipment.

Section 27 of the Commerce Act prohibits contracts, arrangements or understandings that have the purpose or effect or likely effect of substantially lessening competition.

After receiving a complaint from Amare, the Commission investigated and concluded that the emails may have placed Wesfarmers at risk of contravening, or attempting to contravene, s 27 of the Commerce Act.

"This is extremely serious conduct by these employees", said Commission Chair Paula Rebstock.

"Their actions proved ultimately futile, but any attempt to raise the barriers of entry to a market defeats the purpose of competition - lower prices, better quality and innovation."

The Commission has issued Wesfarmers with a formal warning in respect of its behaviour.

While no further action will be taken at this time, Wesfarmers should very carefully consider the implications under the Commerce Act of any future communications with manufacturers and importers regarding supply to its competitors, Ms Rebstock said.

The Commission's warning is not a ruling of law as only the Courts may ultimately determine whether the conduct is in breach of the Commerce Act.

Background

Wesfarmers Industrial and Safety New Zealand Limited is a subsidiary of Wesfarmers Limited. It manufactures and supplies products in New Zealand through its subsidiaries NZ Safety and Protector Safety Supply.

Amare Safety is a private company, supplying personal protective safety equipment and associated products and services in Australia and New Zealand.

ENDS


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