The Hong Kong Liner Shipping Association has submitted to the Hong Kong Competition Commission for consideration a block exemption for liner shipping agreements.  The HK Commission gave interested parties until March 24 to comment on the Association’s request. Hong Kong’s new Competition Ordinance, which bans cartel and other anticompetitive agreements, took effect just last month (see blog post Hong Kong Competition Ordinance Takes Effect), and without an exemption would presumably prohibit the types of agreements proposed under the exception request.

In the summary of its application (here), the Hong Kong Shipping Association says it seeks immunity for two types of agreements: (i) voluntary discussion agreements (“VDAs”); and (ii) vessel sharing agreements (“VSAs”). VDAs are commercial agreements between carriers whereby parties exchange and review market data and trade flows, supply/demand forecasts and business trends to better inform business decisions.  They may discuss, develop and agree to recommend voluntary guidelines for rates, charges, service contract or tariff terms and other similar commercial issues. Contracts with shippers are then negotiated and agreed by individual carriers (not the VDA), who may or may not follow the VDA’s guidelines. VDAs bring about: rate stability; service stability; and rate and surcharge transparency, all of which represent efficiencies that benefit customers (and ultimately the wider Hong Kong economy) by enabling better planning and budgeting of long-term shipping costs. VSAs, by contrast, are operational and similar to airline code-sharing agreements, with carriers discussing and agreeing on “technical and operational arrangements relating to the provision of liner shipping services, including the coordination or joint operation of vessel services, and the exchange or charter of vessel space.

The HK Competition Commission is calling for interested parties to submit their views in relation to the application (here). In particular, the Commission said it is seeking comment on experiences with using the two types of agreements in Hong Kong business operations, specific concerns related to either agreement, economic efficiencies related to either and broad market conditions in the industry, “including the state of competition.”  The decision could be critical to the continuation of Hong Kong’s shipping industry, as discussed in this Journal of Commerce article (here).

Liner agreements are common in the shipping industry because cooperation can have pro-competitive efficiency enhancing effects that can benefit customers through increased service and lower prices. The Hong Kong Shipping Association has documented the benefits of, and widespread acceptance of, shipping agreements in the international community (here).  But, even if the liner agreement exemptions are approved, it is critical for the industry to understand that the exemptions are limited to the specific terms of the immunity. Carriers that confer with one another on legal exemptions have to be particularly aware of the limitations of the immunity and the consequences of reaching broader or non-reported agreements.  Over the years, there have been enforcement actions brought against carriers in industries where the agreements reached extended beyond the limited scope of any immunity.  I myself led a prosecution of a worldwide ocean parcel tanker price fixing/customer allocation agreement that ran from at least 1998 into 2002.

More recently, the Antitrust Division of the United States Department of Justice has brought criminal actions against shippers and individuals in the auto roll off carrier industry for industry wide-price fixing. United States prosecutes cartels, include shipping cartels, as crimes, punishable by huge fines and jail sentences for individuals.  An employee of Japan-based NYK pled guilty and was sentenced to 15 months in a U.S. prison for his involvement in a conspiracy to fix prices, allocate customers and rig bids of international ocean shipping services for roll-on, roll-off cargo, such as cars and trucks, to and from the United States and elsewhere.  This was the third case against an individual in the Antitrust Division’s ocean shipping investigation, and the first against an individual from NYK.  Three corporations have agreed to plead guilty and to pay criminal fines totaling more than $136 million, including NYK, which has agreed to pay a criminal fine of $59.4 million.  See the DOJ press release here.   The investigation by the US DOJ has spurred enforcement actions by several other jurisdictions including the EU, China, South Africa and others, though the US is usually alone in seeking jail for individuals.  Here is a blog post I did on the huge fines recently imposed in China–China Fines 7 Shipping Companies $65 Million.

Briefly put, immunity for two carriers to discuss and agree on code sharing for a specific route is not a license for an industry wide agreement to fix prices. Or, on non-legal terms as my Mom used to say, “I said you could borrow the car; I didn’t say you could drive to Las Vegas.” [She said that to my brother; I was an angel.]

On a related note, I will be giving a talk before the American Chamber of Commerce in Hong Kong as part of a trade policy panel on February 1, 2016 (here). The topic will include how the US goes about prosecuting international cartels and how Hong Kong’s new Competition Commission begin its enforcement efforts.

Thanks for reading.

I will be attending the International Cartel Worksop in Tokyo from February 3-5.  The workshop centers around a hypothetical international cartel investigation with enactments of the many behind the scenes interactions such as discussions among various enforcement agencies plan simultaneous dawn raids, the decision of in-house and outside counsel about whether to seek amnesty/leniency and the tough choices that counsel for individual defendants/targets face in deciding whether to cooperate.  The roles on the panels are played by actual enforcers and counsel experienced in this area.  I will be portraying a target of the investigation discussing options with my counsel.  There will also be mock courtroom proceedings. (Hopefully one where my innocence is established!)

I’ve reposted a message below from Roxann Henry, Chair of the ABA Antitrust Section with a link to the program in case you are interested;

**********************************************************************

It’s not too late to register for the International Cartel Workshop to be held in Tokyo on February 3-5, 2016. With over 300 already registered, the participation of top enforcers from jurisdictions around the globe — including the US, EC, Canada, Brazil, and Japan — and mock courtroom proceedings in both civil and criminal cases before a US federal judge, Tokyo will abound with new insights and fantastic networking. A special, one-time only 50% discount for in-house legal departments has driven attendance from the corporate world in Japan and brought new members to the ABA and the Section. (The least expensive way for in-house legal department members from outside the US to register is to join the ABA at the international rate and the Section, then take advantage of the Section rate.) If your practice involves cartels, don’t miss this event!

As the Section year nears its halfway mark, I once again want to thank everyone for their work on behalf of the Section.

Roxann Henry, Chair

International Cartel Workshop 

When I was a kid, there were times when it looked like I was in big trouble, but was able to talk my way out of it.  “Mom, I know this looks bad, but ….”  (Probably I did do it, but it was good practice for being a lawyer.)  There are times when even the most ethical companies can “look” like they may have violated the antitrust laws.  And it may not be as simple as explaining to Mom why things aren’t the way they look.  That “splaining” may take years of costly litigation, even for a defendant that hasn’t done anything wrong.  That is why antitrust/competition law compliance training is important, even for companies that have the highest ethical standards.  Not only is it important to not violate the law, but it is import to know how to communicate the pro-competitive merits of actions in the marketplace and to document why decisions were made.

Let me give one example.  In a commodity market with few sellers, it is natural that prices are going to be similar, if not identical.  If a company’s pricing is above the market in a commodity, their sales will suffer.  But, there is a thin line between “conscious parallelism” and price fixing.  A communication to customers such as this may be the hook to suggest sellers have crossed the line:  “The X industry has not been profitable and as of March 1 our prices will increase 5%.  This is in line with the increases of the other producers in the industry who are also going up.”  The company may be trying to communicate that they are only doing what others are doing to “stay competitive.”  But, referring to “industry pricing” gives the hint of collusion–enough of a hint to possibly draw an antitrust suit.  Much better to simply write:  “We have experienced increases in the cost of several major inputs.  Regrettably, we find it necessary to increase our prices 5% as of March 1.”  And there should be a document in the file explaining the need for the price increase.

To be clear, the first email does not establish that price fixing has occurred.  But, it may be enough,along with other evidence,  to give potential plaintiffs enough to file a case and result in a settlement to avoid costly litigation.  And, while no policies can guarantee a company will never be sued, an educated sales force will greatly lessen that likelihood.

The above is just one example. On January 19, 2016 from 1:00 to 2:15 pm I will be giving a presentation for Clear Law Institute on “Avoiding the Creation of “Hot” Antitrust Documents.”  I will talk about risk assessment for antitrust lawsuits and how to avoid creating the appearance of anticompetitive conduct, while documenting the pro-competitive reasons for activity in the market place.  The announcement/registration for the program is here.   There is a 35% off discount code you can use if you’d like to register: connolly35

Please check it out and see if it might be useful to your organization.   There will be slides that you may want to later  distribute as part of an antitrust compliance program.

Thanks for reading.

Below is a comprehensive post by Avinash Amarnath, attorney with Vinod Dhall & TT&A, New Delhi, India.  Mr. Amarnath covers several subjects including the new Chair of the Competition Commission of India.

India Update 2016 – Vol I

Hello and a happy new year to all readers. There were a few significant cartel developments towards the end of 2015 in India which I will be covering in this post along with some recent administrative developments.

 New Chairman of CCI appointed

Mr. D. K. Sikri, a former officer of the Indian Administrative Service (IAS) has been appointed by the Government of India as the new Chairman of the Competition Commission of India (CCI). Mr. Sikri succeeds Mr. Ashok Chawla, whose tenure ended on 7 January 2016.

COMPAT sets aside cartel fines against cement companies

The most significant cartel development of 2015 happened to come right at the end. On 11 December 2015, the Competition Appellate Tribunal (COMPAT) set aside an order of the CCI imposing fines amounting to approx. USD 945.4 million on 11 cement companies and their trade association for operating a cartel. The order was set aside on due process grounds and the matter was remitted back to the CCI for a fresh hearing and decision. The cement companies, amongst others, argued before the COMPAT that the CCI’s order violated the rules of natural justice and in particular, the rule that he who hears must decide as the Chairperson of the CCI who did not attend the oral hearings of the parties had participated in the decision making process by signing the order. The CCI’s position was that it only performs administrative functions and therefore, the rules of natural justice should not be applied to it in a strict manner. Further, the CCI argued that no real prejudice had been caused to the parties as a result of this alleged violation of the rules of natural justice.

The COMPAT observed that the basic question to be determined was whether the CCI is merely an administrative body or whether the CCI performs quasi-judicial functions and is therefore, bound by the rules of natural justice. After an extensive review and discussion on the powers of the CCI under the Indian Competition Act, 2002 (Competition Act), the procedure for dealing with a case and several case law of the Supreme Court of India on whether the rules of natural justice apply to administrative and quasi-judicial actions, the COMPAT concluded that it was evident that the CCI performed quasi-judicial functions while hearing and disposing off antitrust cases. Accordingly, the CCI was bound by the rules of natural justice including the rule that he who hears must decide. The COMPAT also rejected the argument of the CCI that no prejudice was caused to the parties as a result of this lapse by distinguishing the facts of this case from other precedents relied on by the CCI. Further, the COMPAT found that actual prejudice had been caused by this lapse as the Chairperson had lent his signature to the final order without having heard the various substantive arguments raised by the parties during oral hearing. In any event, it would be very difficult to judge whether prejudice had been caused as it would be impossible to determine the outcome of the case had the Chairperson not participated in the decision making process. Finally, the COMPAT urged the CCI to evolve a comprehensive protocol and lay down guidelines for investigating and hearing a case in consonance with rules of natural justice. [Read more…]

Shipping cartels have been a frequent target of prosecution by the Antitrust Division of the United States Department of Justice. The rules around shipping cartels can be confusing because certain joint pricing activity can be legal and there are also exemptions for other cartels. But, as some companies have found out the hard way, there is no blanket exemption for collusive pricing in the shipping industry. Moreover, the number of enforcement agencies jumping in the water of cartel prosecutions is expanding. The United States has had an active shipping cartel investigation with prosecutions in the car carrier shipping business. Now, China has fined seven shipping companies, a total of 407 million yuan ($65 million) for price-fixing in what appears to be the same cartel.

The National Development and Reform Commission (NDRC) oversee the pricing restrictions of the antimonopoly law. In an announcement today, the agency said that for four years the companies colluded to raise rates on shipments of cars, trucks, and construction machinery across five shipping routes, including between China and North America, Latin America and Europe. The cartel targeted “roll-on, roll-off” shipping rates for cars, trucks and construction equipment. These are specialized cargo ships that can carry hundreds of vehicles.

The NDRC imposed fines of four to nine percent of the companies’ 2014 revenues of their related China business. EUKOR Car Carriers Inc. was hit with the largest fine, 284 million yuan ($45 million). At the other end of the spectrum, Nippon Yusen KK (NYK) said it fully cooperated with the probe and was granted immunity from any fine. Besides Eukor’s $45 million penalty, Wallenius Wilhelmsen Logistics, a Swedish-Norwegian company, was fined 45 million yuan ($7.1 million). Mitsui O.S.K. Lines Ltd. was fined 38 million yuan ($6 million). Other companies penalized were Japan’s K Line and Eastern Car Liner Ltd. and Chile’s CSAV and CCNI.CSAV and its roll-on, roll-off shipping unit were fined the smallest amounts of less than $1 million each.

Several years ago when I was with the Antitrust Division, I led an investigation and prosecution of a global parcel tanker cartel.  At the time, I don’t believe China’s cartel enforcement law was enacted. Now, China has become a serious cartel enforcement agency. The NDRC is believed to be active in the current global capacitors cartel investigation. The Chinese have also fined cartel members in the TFT-LCD cartel.

Never Too Late for a Competition Law Compliance Program

Several of the fined companies issued announcements acknowledging the illegal conduct and vowing that the collusion would not recur. The companies stated that they were taking the action seriously and developing and implementing a competition compliance program. Of course, a compliance program is much better when developed before being fined for collusion, but a prosecution is sometimes what it takes to get the issue to be taken seriously by senior management. A compliance program is not only effective at preventing cartel activity, but even if it fails, having executives knowledgeable about competition law is also the best way to be in a position to be the first to qualify for immunity if there is an investigation.

US Still Main Concern for International Cartels

The biggest reason for an international company to have an effective competition law compliance program may be the aggressive international cartel prosecution program of the Antitrust Division of the US Department of Justice. The United States is not shy about prosecuting foreigners for cartel activity that affects the United States. In the United States price-fixing and bid rigging are criminal offenses carrying jail sentences of up to 10 years. And even if a foreign executive thinks he will never be apprehended by the US, being a fugitive on an Interpol Red Notice puts a serious crimp in any travel plans.

In the Chinese investigation NYK got immunity for their cooperation. This was not the case in the United States.  On October 6, 2015, the US Department of Justice announced that three former ocean freight executives have been indicted for participating in the car carrier cartel:

These executives – Yoshiyuki Aoki, Masahiro Kato and Shunichi Kusunose – have been charged with allocating customers and routes, rigging bids and fixing prices for the sale of international ocean shipments of roll-on, roll-off cargo to and from the United States and elsewhere.  The affected cargo included cars, trucks, construction equipment and agricultural equipment.  Aoki, formerly of Kawasaki Kisen Kaisha (K-Line), and Kato and Kusunose, formerly of Nippon Yusen Kabushiki Kaisha (NYK), are among seven executives who have been charged in the investigation so far.  Four have pleaded guilty and been sentenced to prison.  NYK, K-Line and one other company have also pleaded guilty and paid more than $136 million in criminal fines.

If you have any questions about competition law or compliance programs, please feel free to reach out at [email protected] or on LinkedIn (here)

Thanks for reading.

If an FTAIA related case is ever taken by the Supreme Court I believe it will be a private civil price fixing damage case like Best Buy Co., Inc. v. Hannstar Display Corporation. The Antitrust Division’s international cartel prosecutions have all involved import commerce; providing a jurisdictional basis without reaching possible FTAIA related commerce. [And if I could decide a case without reaching FTAIA issues, I sure would.]  The recent Antitrust Division case filing in capacitors follows this pattern. The Information alleged that both import commerce and FTAIA related commerce were subject to the agreement to fix prices.

There was a very interesting oral argument before the Ninth Circuit on December 11, 2015 dealing with a civil price fixing damage case related to the TFT-LCD price fixing cartel: Best Buy Co., Inc. v. Hannstar Display Corporation.  The case raises a number of interesting FTAIA related issues, some of which I’ll discuss below.   But if you are interested in viewing the oral argument, the Ninth Circuit makes video available and the Best Buy Co., Inc. v. Hannstar Display Corporation argument can be viewed here.

A couple of key factual notes about the case:

• HannStar, which pled guilty in the criminal TFT-LCD, case only sold panels to foreign entities.  It shipped no price fixed panels into the US, nor finished goods because it did not make those.  But, some HannStar price fixed panels were assembled into finished products, including desktop and laptop computers and televisions, that were imported into the US.  Some of Hannstar’s co-conspirators did sell finished products in the US that contained price fixed screens that were purchased by Best Buy.
• The panel noted that the lack of Hannstar import commerce distinguished this case from the case the United States brought against the cartel, some of whose members imported panels directly into the Unites States so jurisdiction was not based on the FTAIA. United States v. Hsiung,
  758 F.3d 1074 (9th Cir. 2014).
• Also, Best Buy in the US purchased finished products with the price fixed screens, distinguishing the case from Motorola Mobility where Motorola’s foreign subsidiary purchased the panels. Motorola Mobility v. AU Optronics, 775 F.3d 816, 826-27 (7th Cir. 2015).
• Best Buy was an opt out plaintiff.  As such, it had to prove that it suffered injury as the result of the defendants’ anticompetitive conduct.  It could not piggyback on the “class” it had opted out of.

The case involved a special jury verdict form that is at the heart of the appellate argument.  The jury found that Best Buy’s injury arose from a conspiracy involving import commerce despite the fact that it was undisputed that Best Buy purchased no LCD screens that were the subject of the cartel agreement.  Best But bought only the finished products (laptops, etc) that contained the price-fixed screens.   Import commerce comes within in the scope of the Sherman Act without application of the FTAIA. But at the same time, the jury found that the conspiracy did not have a “direct, substantial and reasonably foreseeable effect on trade or commerce.” In other words, jurisdiction could not be based on the FTAIA.

Here are the relevant questions in the Special Verdict form:

Question 1: Did Best Buy prove, by a preponderance of the evidence and in accordance with the instructions given to you, that Toshiba knowingly participated in a conspiracy to fix, raise, maintain or stabilize the prices of TFT-LCD panels?  No.

Question 2: Did Best Buy prove, by a preponderance of the evidence in accordance with the instructions given to you, that HannStar knowing participated in a conspiracy to fix, raise, maintain or stability the prices of TFT-LCD panels?   Yes.

Question 3: Did Best Buy prove, by preponderance of the evidence and in accordance with the instructions given to you, that the conspiracy involved TFT-LCD panels and/or finished products (e.g., notebook computers, computer monitors, televisions, camcorders, cell phones and digital cameras containing TFT-LCD panels) imported into the United States?  Yes.

Question 4: Did Best Buy prove, by preponderance of the evidence and in accordance with the instructions given to you, that the conspiracy involving these imported TFT-LCD panels and/or finished products produced substantial intended effects in the United States?  Yes.

Question 5: Did Best Buy prove, by preponderance of the evidence and in accordance with the instructions given to you, that the conspiracy involved conduct that had a direct, substantial and reasonably foreseeable effect on trade or commerce in the United States?  No. 

Question 8: Did Best Buy prove, by preponderance of the evidence and in accordance with the instructions given to you, that it was injured as a result of the conspiracy in which one or both of the defendants knowingly participated?  Yes.

Question 9: For Best Buy’s direct purchases only, what is the amount of damages Best Buy proved, by preponderance of the evidence and in accordance with the Court’s instructions, that it suffered as a result of the conspiracy?  $ 7,471,943

The FTAIA issues in the case are particularly confusing because Question 3 in the Special Verdict form was in the alternative “did the conspiracy involve panels and/or finished products imported into the United States?” HannStar argued that the jury was wrong in finding that the conspiracy involved import commerce because HannStar never sold panels in the US and Best Buy bought only finished products. “The conduct at issue was the agreement to fix the price of panels—wholly foreign conduct. [The conspiracy was] not to import finished products containing those panels to the US” HannStar attorney Belinda Lee, Latham & Watkins, argued.  Lee noted that HannStar engaged in price-fixing on liquid crystal display panels, not finished goods. HannStar then argued that since the jury did not find an FTAIA basis for jurisdiction [that the conspiracy produced a direct substantial and reasonably foreseeable effect in the United States], there is no jurisdiction. “The jury was asked and they said no; they found no domestic effect,” Lee told the panel. Best Buy, therefore failed to prove that its claims arose from conduct covered by FTAIA.

Because the jury found import commerce, an issue in the case became whether the sale of the finished product (i.e. a laptop with affixed price LCD screen) could as a matter of law constitute import commerce. This invoked the “targeting” theory, i.e. that a cartel could be found to be covered by the Sherman Act even if there was no imports into the US if the cartel “targeted” the US.  Judge Kim Wardlaw said that the jury had found there was substantial intent on the part of the defendants to create price effects in the US market. Was this enough to make the good import commerce (which jury found) or as a matter of law does this evidence only go to the domestic effects test? (and, confusingly, the jury found no domestic effects).

Judge Susan Graber expressed concern that finding import commerce jurisdiction based on a component part price fix could expand Sherman Act jurisdiction over foreign commerce beyond what Congress intended. She gave an example of a $10 foreign-based price fixed gas cap on a $50,000 car that is then imported into the United States. Is that import commerce? What about where the part is little in a big product?  And the harm is quite small? The Court clearly was concerned with drawing the line [but in the instant case, the TFT-LCD screens were a fairly large cost import of the finished product.]

Hannstar attorney Lee argued (correctly I believe) that the issue of whether a component part price fix can provide Sherman Act jurisdiction relates only to whether the FTAIA’s “direct, substantial, and reasonably foreseeable” effect on commerce test is met. And on that question the jury answered “No.” Import commerce is defined as a purchase by a US consumer of the price fixed product.  There is, however, some support for the proposition that in certain circumstances the import commerce exception requires only that the defendants’ anticompetitive conduct “target import goods or services,”  Animal Sci. Prods., Inc. v. China Minmetals Corp., 654 F.3d 462, 470 (3d Cir. 2011); Minn-Chem, Inc. v. Agrium Inc., 683 F.3d 845, 855 (7th Cir. 2012) (en band).  I don’t think, however, the targeting analysis applies to whether components priced fixed in foreign commerce but imported into the US in a finished product constitutes import commerce.  Such a reading would essentially render moot the FTAIA jurisdictional basis of “direct, substantial and reasonably foreseeable effect” on US commerce.

There were a couple of other interesting features of the case:

• Opt Out: There can be advantages to being an opt out plaintiff, but there may also be some downsides. Plaintiffs in class action just have to prove some import commerce, but since Best Buy was an opt out, it had to demonstrate their own purchases trace back to import commerce or the FTAIA domestic effect.
• Which Best Buy?  Again as an opt out Best Buy had to trace its purchases to one of the conspirator companies and because Best Buy also has foreign subsidiaries it had to establish that the US company made the purchases (To avoid a Motorola Mobility situation). It seemed Best Buy overcame this hurdle, but it is something plaintiffs need to watch out for. B failed to trace the purchases from BB entities in US to HannStar. If foreign entities you have Motorola.

A final note: The jury in Best Buy’s trial ordered HannStar to pay almost $7.5 million in damages. The Court then trebled the award to more than $22 million. But because Best Buy had settled with so many of HannStar’s co-conspirators, the court reduced the award to zero. Ouch!

Best Buy was represented by Katherine Wiik of Robins Kaplan LLP.

Thanks for reading.

Hong Kong’s Competition Ordinance became effective today, December 14, 2015.  The Hong Kong Competition Commission issued a press release: “Competition Ordinance Comes into Full Effect Today.”

I discussed some aspects of Hong Kong’s proposed Competition  Ordinance in an earlier post: “Hong Kong’s Competion Regime Ready for Full Launch.”  The South China Morning Post today published an article by Denise Tsang ([email protected]) about the Competition Ordinance.  The full article is here.   Some highlights:

• “A law in the making for more than two decades, the Competition Ordinance is set to check anti-competition behaviour as the city joins more than 100 other jurisdictions with such laws.”
• “In Hong Kong, the competition law remains a civil liability. Offenders face a fine of up to 10 per cent of their Hong Kong turnover for each year of the infringement. Company directors face a ban of up to five years and can be sued by clients.”
• “As its first order of business, [Anna Wu Hung-yuk, Chairperson of the Commission],
  said the commission had identified property maintenance firms and fuel suppliers such as petrol stations as top targets of research, as the former were notorious for bid rigging and the latter for cartels.”

The home page of the Hong Kong Competition Commission can be found here.

Thanks for reading.

A news article from the Manawatu Standard in New Zealand reports that “Price-fixing executives will not be subject to jail terms after Government u-turn.”  Paul Goldsmith, the Minister of Commerce and Consumer Affairs said he was stripping criminal sanctions for cartel behavior currently contained in the Commerce (Cartels and Other Matters) Amendment Bill.  He said that after a year of consideration he had made an “on balance decision” that the costs of introducing criminal penalties outweighed the benefits.

The Minister said “If we keep providing new ways for directors to go to prison if the judgements are wrong then overall there’s a potential chilling effect on innovation.”  New Zealand’s decision is counter to the trend toward criminalization of cartel behavior, although in many countries criminal penalties, while available, are rarely imposed.  Countries that do impose criminal penalties, such as the United States, reserve criminal prosecution for “hard-core” cartel conduct (price-fixing; bidding rigging) where there is an element of fraud: i.e. buyers (or sellers) believe there is competition when in fact competition has been reduced or eliminated by a secret agreement among the bidders/vendors.  These types of secret cartel arrangements are deemed to have no pro-competitive benefit as opposed to joint ventures where entities share risk, resources and the buyer can independently weigh the merits of contracting with the joint entity.

The full Manawatu Standard article can be found here.