Most forestry contractors understand the importance of competing hard for work, delivering value, and building strong relationships with clients. However, there is a line between healthy competition and behaviour that can breach New Zealand's Commerce Act.
The Commerce Act exists to promote fair competition and protect businesses and consumers. While many contractors may think the law only applies to large corporations, it applies equally to small businesses and contractors.
What You Can Do
Contractors are free to:
Set their own rates and prices independently.
Decide which work they want to tender for.
Negotiate commercial arrangements with clients.
Discuss industry issues such as safety, training, workforce shortages, and productivity improvements.
Healthy competition is an important part of a strong contracting sector.
What You Must Not Do
Under the Commerce Act, contractors must not enter into arrangements with competitors that reduce competition.
Examples include:
Agreeing on rates or pricing.
Agreeing on minimum charges for services.
Deciding who will win a tender or contract.
Taking turns to submit the lowest tender.
Agreeing not to compete for certain clients or regions.
Sharing commercially sensitive information about pricing, margins, future bids, or tender strategies.
Even informal conversations over coffee, at a field day, or during industry events can create risks if discussions move into these areas.
Be Careful When Talking With Competitors
Industry meetings and networking events are valuable, but contractors should avoid discussing:
Current or future rates.
Tender prices.
Contract negotiation strategies.
Profit margins.
Plans to increase rates collectively.
A good rule of thumb is this: if the discussion could influence how competitors price, bid, or compete, don't have it.
Penalties Can Be Significant
Breaches of the Commerce Act can result in substantial penalties for both businesses and individuals. Investigations can also damage reputations and business relationships.
Importantly, saying "everyone else was doing it" is not a defence.
What About Industry Advocacy?
Industry associations such as FICA play an important role in advocating for contractors on issues including safety, workforce development, contracting conditions, and industry sustainability.
However, advocacy must never involve coordinating prices, rates, or tendering behaviour between members.
A Simple Test
Before discussing a topic with another contractor, ask yourself:
"Would I be comfortable if this conversation was recorded and reviewed by the Commerce Commission?"
If the answer is no, it's best not to have the conversation.
Final Message
Strong competition benefits the forestry industry, contractors, clients, and workers. Contractors should focus on improving productivity, safety, innovation, and service quality while making independent decisions about pricing and commercial activities.
Compete hard. Compete fairly. And always make your own business decisions.
