The New Zealand Commerce Commission has released a statement posted on its website formally indicating that it is currently investigating the alleged forex benchmark manipulation.
In its Cartel Leniency Policy, the commission spells out how an individual or a company can sign for a conditional immunity or official cooperation-if immunity isn’t provided- in an investigation into cartel behaviour.
It lists cartels as those illegal agreements between rival firms not to compete, such as output restrictions, price fixing, bid rigging as well as allocation of suppliers, territories and customers.
However, this policy doesn’t incorporate other kinds of anti-competitive behaviour such as resale price maintenance or a firm taking advantage of a significant market power.
New Zealand uses leniency to help prevent the formation and existence of cartels. It is also used elsewhere in the world to fight the vice. It isn’t easy to detect cartels, which can ruin an economy by eroding the advantages of free market competition leading to narrow consumer choice and obscene prices.
To persuade a cartel member to give information about it, conditional immunity is granted to the first person who tells the Commission of its existence and provides data to back up the claims. This dismantles cartels and ensures the Commission blocks such harmful trading practices.
The Commission said that it drew its revised Cartel Leniency Policy on March 1, 2010. The policy outlines with greater clarity to whistleblowers about the process for immunity and cooperation.
The Commission also said that its former Cooperation Policy no longer covers the cartels. Therefore, cooperation applicants seeking to reveal the existence of cartels are covered in the Cartel Leniency Policy.
To contact the reporter of this story; Yashu Gola at Yashu@forexminute.com