1. What is the relevant legislative framework?
Australia’s competition legislation is the Competition and Consumer Act 2010 (Cth) (CCA).
The cartel provisions are contained in Part IV, Division 1 of the CCA. Cartel conduct is prohibited per se, regardless of competitive eﬀects. The CCA establishes corresponding civil liability provisions and criminal oﬀences for making, or giving eﬀect to, a contract, arrangement or understanding (CAU) between competitors or potential competitors containing a “cartel provision”.
A provision of a CAU will be a “cartel provision” if it is between two or more parties who are actual or potential competitors in relation to the supply, acquisition or production of the relevant goods or services and the provision has either:
- the purpose or eﬀect of ﬁxing, controlling or maintaining the price of goods or services supplied by any or all of the parties; or
- the purpose of:
- preventing, restricting or limiting the production, capacity, supply or acquisition of goods or services by any or all of the parties;
- allocating customers or territories supplied by any or all of the parties; or
- rigging bids.
The criminal cartel oﬀences have an additional “fault element” requiring proof that the accused had the requisite knowledge or belief of the essential elements of the oﬀence. The oﬀence must be established beyond reasonable doubt. By comparison, civil liability requires the elements to be established on the (lower) balance of probabilities.
There are a number of exceptions to cartel conduct, including for or in relation to:
- joint ventures;
- related bodies corporate;
- the acquisition of shares or assets;
- conduct that constitutes exclusive dealing or resale price maintenance;
- collective bargaining conduct notiﬁed to the Australian Competition & Consumer Commission (ACCC) (not bid-rigging); conduct subject to a grant of authorisation; and
- the collective acquisition of goods or services (exception applies to price ﬁxing only).
The CCA also contains other exceptions which apply to but are not speciﬁc to cartel conduct, including for acts or things speciﬁcally authorised by Commonwealth or State laws, provisions for the conduct of partnerships, certain employment conditions, and provisions relating exclusively to the export of goods of services (but only if full particulars are provided to the ACCC within 14 days of the CAU).
Part X of the CCA enables parties to international liner cargo shipping conference agreements to obtain partial and conditional exemptions from the cartel provisions. To beneﬁt from the exemption, the relevant conference agreements must be registered.
2. To establish an infringement, does there need to have been an eﬀect on the market?
No, cartel conduct is prohibited per se, irrespective of competitive eﬀect.
3. Does the law apply to conduct that occurs outside the jurisdiction?
Yes, the cartel provisions apply to conduct outside Australia in certain circumstances:
- the cartel conduct must be in “trade or commerce within Australia or between Australia and places outside Australia”; and
- for conduct outside Australia, the cartel provisions apply to:
- either body corporates incorporated or registered within Australia or “carrying on business” within Australia;
- Australian citizens; or
- persons ordinarily resident within Australia or “otherwise connected with” Australia.
4. Which authorities can investigate cartels?
The ACCC is responsible for investigating cartel conduct, managing the immunity/leniency processes and instituting civil cartel proceedings. The Commonwealth Director of Public Prosecutions (CDPP) prosecutes criminal cartels. The ACCC refers serious cartel conduct to the CDPP for consideration for criminal prosecution in accordance with a Memorandum of Understanding (MOU) between the two agencies. The Australian Federal Police (AFP) may also execute search warrants to obtain evidence in criminal cartel investigations.
5. What are the key steps in a cartel investigation?
The conduct of a cartel investigation is a matter for the ACCC as the responsible investigating authority. There are no legislative or other prescribed timeframes for an investigation (other than the six year time limit for the ACCC to commence proceedings to recover a civil penalty). Cartel investigations are typically protracted and often last years.
The ACCC gathers evidence voluntarily or through its compulsory information gathering and search and seizure powers (see Section 6).
Following an investigation, the ACCC may:
- refer serious cartel conduct to the CDPP. It is a matter for the CDPP to determine whether to commence a criminal prosecution;
- initiate civil proceedings in the Federal Court seeking penalties and other orders;
- resolve less serious conduct by accepting court enforceable undertakings or through engagement and negotiation where the party may commit to do various things to address the conduct and ensure it does not recur; or
- take no further action (such as for technical contraventions).
The CCA invests the ACCC with signiﬁcant investigatory powers.
Under s 155 of the CCA, the ACCC may issue a notice to a person if they have “reason to believe” that the person is capable of providing information, documents or evidence relating to a matter that constitutes, or may constitute, a contravention of the CCA.
Speciﬁcally, the ACCC can issue three types of s 155 notices:
- to furnish information;
- to produce documents, or
- require a person to appear before the ACCC to give evidence, orally or in writing.
It is an oﬀence to fail to comply with a s 155 notice or knowingly provide false or misleading information in response to a s 155 notice. In ACCC v Rana  FCA 374, the defendant was sentenced to gaol for refusing to comply, and aiding and abetting the failure of a company he controlled to comply, with a s 155 notice. In ACCC v Davies (No 2)  FCA 1290, the respondent was ordered to perform 200 hours of community service for aiding and abetting a company’s failure to comply with a s 155 notice. The Court has also imposed ﬁnes for providing false or misleading information in response to a s155 notice (e.g., ACCC v Narnia Investments Pty Ltd  FCA 395 and ACCC v Boyle  FCA 1039, the latter involving the giving of false or misleading answers in a s 155 examination).
Since 1 January 2007, the ACCC has had the power to obtain a search warrant authorising it to enter speciﬁed premises and seize documents and things, including electronic equipment and data storage devices, in relation to alleged contraventions of the CCA.
An executing oﬃcer may make copies of evidential material and/or seize things. They may also require a person to answer questions or produce evidential material. A failure to comply with any such requirement is a criminal oﬀence.
If a warrant is valid, an occupier must provide reasonable facilities and assistance. An occupier is entitled to observe the search being conducted, receive a receipt of each document or thing seized and request a copy of the material seized.
In criminal investigations, the AFP may also obtain a warrant under the Crimes Act 1914 (Cth) (Crimes Act).
The ACCC (together with the AFP) can also obtain a warrant allowing the interception of telephone communications or the installation of listening/surveillance devices.
7. On what grounds can legal privilege be invoked to withhold the production of certain documents in the context of a request by the relevant authorities?
Information or documents subject to legal professional privilege (LPP) do not need to be disclosed to the ACCC under a s 155 notice or search warrant. Broadly, in Australia, LPP applies to:
- conﬁdential communications between a client and a lawyer (generally including in-house counsel and lawyers qualiﬁed outside the jurisdiction), and in some circumstances, a client or its lawyer and a third party; and conﬁdential documents,
- where the communication is made or the document was prepared for the dominant purpose of the client being provided with or obtaining legal advice, or for use in existing or anticipated litigation.
8. What are the conditions for a granting of full immunity? What evidence does the applicant need to provide? Is a formal admission required?
The ACCC’s Immunity and Cooperation Policy for Cartel Conduct sets out when an immunity applicant (corporation or individual) will be eligible for and granted conditional civil immunity. The policy was updated on 1 October 2019 (Updated Policy) with changes that included four new or strengthened conditions for immunity. Currently, an applicant will be eligible for immunity if it:
- is the ﬁrst party to seek immunity for the cartel;
- is or was a party to a cartel;
- admits it has engaged or is engaging in cartel conduct and the conduct may constitute a contravention of the CCA, and for corporations only, the admissions are a truly corporate act;
- has not coerced others to participate in the cartel;
- has ceased or undertakes it will cease its involvement in the cartel;
- has at all times provided full, frank and truthful disclosure, and cooperated fully and expeditiously when making the application, including taking all reasonable steps to procure the assistance and cooperation of witnesses (for corporations) and to provide suﬃcient evidence to substantiate its admissions, and agrees to continue to do so on a proactive basis throughout the ACCC’s investigation and any ensuing court proceedings;
- has entered into a cooperation agreement with the ACCC; and
- has agreed to maintain conﬁdentiality regarding its status as an immunity applicant and the details of the investigation and any ensuing proceedings (unless otherwise required by law or with written consent).
One of the changes introduced in 2019 was the requirement for an immunity applicant to admit it has engaged in cartel conduct whereas previously, it was only necessary for an immunity applicant to admit that the conduct may have constituted cartel conduct. Another change is that at the time of an application, the ACCC will generally not grant immunity if the ACCC is already in possession of evidence that is likely to establish at least one contravention of the CCA. In the past, the ACCC would not grant immunity if it had received written legal advice that it has reasonable grounds to institute proceedings in relation to the cartel.
If a corporation qualiﬁes for conditional civil immunity, it may also seek derivative immunity for related corporate entities and/or for its current or former directors, oﬃcers and employees who were involved in the cartel conduct. The conditions attaching to derivative immunity are the same as those for immunity.
If it considers the conditions for immunity are satisﬁed, the ACCC will recommend to the CDPP that it grant criminal immunity. The CDPP will make its own decision on such recommendation. If the CDPP considers the criteria for immunity are met, it will provide a “letter of comfort” to the applicant that it intends to grant criminal immunity. Before commencing any prosecution, the CDPP will then provide the applicant with a written undertaking granting criminal immunity.
9. What level of leniency, if any, is available to subsequent applicants and what are the eligibility conditions?
Parties not eligible for “ﬁrst in” immunity may seek to cooperate with the ACCC, but there is no immunity from prosecution and there are no pre-determined discount levels or ranges that apply. It is a matter for the Courts to determine the appropriate penalty or ﬁne, having regard to the extent of any discount for cooperation. The ACCC or CDPP will set out in submissions to the Court any cooperation provided by a party and their assessment of the extent and value of the cooperation. In relation to individuals who do not have immunity, in practice, the ACCC or the CDPP may provide “assurances” in return for them providing a witness statement to the eﬀect that the person’s statement will not be used as evidence against the individual in civil or criminal proceedings (other than in any proceedings concerning the witness knowingly providing false or misleading evidence).
The Updated Policy sets out the factors the ACCC/CDPP will consider in assessing the cooperation of a party, such as whether the party:
- approached the ACCC in a timely manner;
- has provided signiﬁcant evidence of cartel conduct; and
- has pleaded guilty (criminal).
The ACCC or CDPP may also require the cooperating party to make admissions, agree to a statement of facts, and/or provide evidence in proceedings. The Updated Policy makes clear that in assessing whether a cooperating party has provided signiﬁcant evidence of cartel conduct, the ACCC will consider the extent to which the evidence was previously unknown to the ACCC or materially advanced the ACCC’s case.
10. Are markers available and, if so, in what circumstances?
Yes, to obtain a marker, the applicant must describe the cartel conduct in suﬃcient detail to enable the ACCC to conﬁrm no other corporation or individual has obtained a marker or applied for immunity in respect of the cartel. Subject to this requirement, a marker can be requested on a hypothetical, anonymous basis.
If a marker is placed, it preserves the recipient’s “ﬁrst in” status for a deﬁned period. The Updated Policy (see Section 8) states that a marker will lapse if suﬃcient information is not provided to the ACCC within the “marker phase” or may be cancelled if the ACCC forms the view the applicant will not be able to satisfy the requirements (for e.g., where the conduct does not disclose cartel conduct).
11. What is required of immunity/leniency applicants in terms of ongoing cooperation with the relevant authorities?
To maintain civil or criminal immunity, a corporation or individual must provide full, frank and truthful disclosure and cooperate fully and expeditiously on a continuing basis throughout the ACCC’s investigation and any ensuing court proceedings. As part of the changes to the Updated Policy (see Section 8), this requirement was strengthened to be on a “proactive basis” and extends to corporations taking all reasonable steps to procure the assistance and cooperation of witnesses and for all applicants to provide suﬃcient evidence to substantiate admissions of cartel conduct.
The Updated Policy also includes new requirements that applicants enter into a cooperation agreement with the ACCC (and continue to comply with it) as well as maintain conﬁdentiality as to their status as an immunity applicant and the details of the investigation and any subsequent proceedings. The ACCC’s template cooperation agreement includes a schedule for detailing the speciﬁc initial actions an immunity applicant must comply with to obtain conditional immunity. According to the template agreement, an applicant is also required to comply with additional requirements of cooperation set out in writing by the ACCC from time to time to obtain and maintain immunity. Conditional immunity will only become ﬁnal after the resolution of any ensuing proceedings against cartel participants who do not have conditional immunity.
12. Does the grant of immunity/leniency extend to immunity from criminal prosecution (if any) for current/former employees and directors?
If a corporation qualiﬁes for civil/criminal immunity, it may also seek derivative immunity for current and former directors, oﬃcers and employees who were involved in the cartel conduct. As a result of the Updated Policy, derivative immunity has been extended to related entities that share a common parent company with the corporate applicant (previously this category of related entities was not covered), as well as current and former directors, oﬃcers and employees of any eligible related entities. The application must specify the relevant individuals for whom derivative immunity is sought. An individual may also apply for civil or criminal immunity if he or she was a director, oﬃcer or employee of a corporation that is or was a party to a cartel.
13. Is there an ‘amnesty plus’ programme?
Yes, where a party is cooperating with the ACCC in respect of one cartel (for which it is not eligible for conditional immunity) and discovers a second, unrelated cartel, the party may apply for conditional immunity in respect of the second cartel and seek “amnesty plus” for the ﬁrst cartel.
Under “amnesty plus”, either the ACCC will recommend to the Court a further reduction in the civil penalty for the ﬁrst cartel or the CDPP will inform the Court of the full extent of the party’s cooperation so as to be taken into account in sentencing.
Eligibility for “amnesty plus” requires the party to be cooperating with the ACCC for the ﬁrst cartel and have conditional immunity for the second.
14. Does the investigating authority have the ability to enter into a settlement agreement or plea bargain and, if so, what is the process for doing so?
In civil cases, parties may agree in principle on the appropriate penalty to be imposed and make submissions to the Court accordingly.
The Court is not a “rubber stamp” but will usually give deference to the parties’ agreement. However, in a civil case instituted by the ACCC against Volkswagen under Australia’s consumer (rather than antitrust) laws in relation to the emissions scandal, the Federal Court rejected an agreed penalty of A$75million, and later imposed a penalty of A$125m. This is the second highest penalty ever imposed for a contravention of Australia’s consumer laws and was upheld on appeal by the Full Federal Court. The High Court (Australia’s highest court) refused Volkswagen’s application for special leave to appeal the Full Federal Court’s decision. More recently, in a civil consumer law case instituted by the ACCC against Uber for false or misleading representations, the Federal Court imposed a penalty of $21m, some $5m lower than the agreed penalty put forward by the parties.
In criminal sentencing, a prosecutor cannot agree on or make submissions as to the appropriate penalty or range, although it can indicate if the Court would fall into appellable error were it to impose a sentence within a penalty range submitted by the accused. However, Iin both civil and criminal cases, ultimately it is for the Court to determine the appropriate penalty/fine.
Civil proceedings can be settled at any time prior to judgment. The parties will usually ﬁle with the Court an agreed statement of facts and may also ﬁle joint submissions on penalty. In criminal proceedings, a settlement will usually involve agreement as to the charges to which the defendant will plead guilty, agreeing the parameters for settlement where permissible, and ﬁling an agreed statement of facts.
In both civil and criminal matters, hybrid settlements, where some but not all aspects are agreed or settled, are possible.
15. What are the key pros and cons for a party that is considering entering into settlement?
Possible advantages of settlement include:
- a reduction in the penalty/ﬁne;
- potentially signiﬁcant saving of costs, time and resources;
- greater scope to shape and limit the facts and evidence forming part of the settlement; and
- greater (but not absolute) certainty as to penalty and to a lesser extent, the ﬁne.
Possible disadvantages of settlement include:
- making admissions;
- reputational damage;
- greater risk of new third-party actions for damages or impacting existing actions;
- limited or no scope to appeal; and
- disclosure of certain settlement material such as an agreed statement of facts.
16. What is the nature and extent of any cooperation with other investigating authorities, including from other jurisdictions?
The ACCC is authorised to provide information obtained under a s 155 notice to an Australian and/or foreign government body (the latter includes an agency of a foreign government) if the Chairperson is satisﬁed the information will assist that body to perform or exercise any of its functions or powers.
The ACCC has also a number of arrangements with overseas competition agencies in relation to competition law enforcement activities. For example, in 2020, the ACCC entered into a MOU with the competition authorities in the US, UK, New Zealand and Canada (known as the “Five Eyes”) to establish a multilateral framework for coordination and cooperation between the countries. It also has numerous speciﬁc cooperation agreements with these and other countries. For example, the Governments of Australia and the United States have an agreement under which the parties assist one another and cooperate on a reciprocal basis in providing or obtaining antitrust evidence.
In response to the disruptions caused by the COVID-19 pandemic to global supply chains, the “Five Eyes” competition authorities formed a new working group focused on preventing anti-competitive conduct in the supply and distribution of goods.
In the context of an immunity application, unless required by law, the ACCC will not share conﬁdential information provided by an immunity applicant with other regulators without consent but will as a matter of course request conﬁdentiality waivers for each jurisdiction in which the applicant has or intends to seek immunity or leniency. The ACCC typically adopts the same approach for cooperating parties. The ACCC may regard a failure to provide waivers as a failure to provide full cooperation.
There are also limited circumstances in which information (even protected cartel information) can be disclosed, including, for example, where the Chairperson of the ACCC is satisﬁed that the disclosure can assist other government agencies/bodies.
17. What are the potential civil and criminal sanctions if cartel activity is established?
Reforms to the CCA which came into effect on 10 November 2022 have increased the maximum penalties for cartel (and other CCA contraventions) five-fold.
For corporations, the maximum civil penalty or criminal ﬁne per cartel contravention/oﬀence now is the greater of:
- A$50 million (previously A$10 million);
- three times the total value of the beneﬁts that have been obtained by one or more persons that are “reasonably attributable” to the conduct; or
- if the court cannot determine the total value of those benefits, 30% of the adjusted turnover of the corporate group during the period the contravention occurred, with a minimum period of 12 months (previously 10% of annual turnover for the 12 months preceding the contravention).
For individuals, the maximum civil penalties have increased to A$2.5 million per contravention, up from A$500,000 per contravention. The maximum criminal sanctions remain unchanged at are A$444,000 fine, 10 years’ imprisonment, or both. The maximum criminal fine is based on the value of penalty units, which was automatically indexed on 1 July 2020 and is indexed every three years, with the next increase to occur on 1 July 2023.
The maximum civil penalty is $500,000 per contravention.
The CCA prohibits corporations indemnifying oﬃcers for pecuniary penalties and legal costs incurred in defending proceedings, in which the oﬃcer is found to be liable for a penalty.
The ACCC can also seek a range of other orders against corporations and individuals including injunctions and disqualifying/banning individuals from managing corporations.
18. What factors are taken into account when the ﬁne is set? In practice, what is the maximum level of ﬁnes that has been imposed in the case of recent domestic and international cartels?
The relevant factors the Court must have regard to in determining the appropriate civil penalty include the following, with the first four being mandatory considerations:
- the nature and extent of the conduct;
- any loss or damage suﬀered;
- the circumstances in which the conduct took place;
- any previous ﬁndings regarding the same or similar conduct;
- the size and degree of market power of the company;
- the deliberateness of the conduct;
- whether the conduct was at the direction of senior management;
- the company’s culture of CCA compliance; the extent of cooperation; and
- speciﬁc and general deterrence.
In criminal matters, an oﬀender is to be sentenced in accordance with the Crimes Act (Part IB). In particular, the sentence imposed must be of a “severity appropriate in all the circumstances of the oﬀence”, and the Court must take into account the matters in s16A(2) (among others).
In CDPP v NYK  FCA 876, the Court found the factors identiﬁed in civil penalty cases bear also upon criminal sentencing and most are, in any event, replicated in some way in the relevant considerations set out in the Crimes Act. Some of the speciﬁc factors in s16A(2) include:
- the degree to which the person has shown contrition;
- if the person has pleaded guilty to the charge;
- the degree of cooperation with law enforcement agencies in the investigation of the oﬀence or other oﬀences;
- the need for adequate punishment; and
- the oﬀender’s prospects of rehabilitation.
In practice, the highest penalty or fine awarded in Australia to date is A$46m imposed on Yazaki Corporation in May 2018 for civil cartel conduct involving the coordination of quotes with a competitor for the supply of wire harnesses used in the manufacture of certain Toyota vehicles supplied in Australia. The largest criminal ﬁnes imposed in Australia to date are A$25m against Nippon Yusen Kabushiki Kaisha, A$34.5m against Kawasaki Kisen Kaisha, Ltd, and A$24m against Wallenius Wilhelmsen Ocean AS, all shipping companies, for cartel conduct in relation to the supply of shipping services to Australia.
19. Are parent companies presumed to be jointly and severally liable with an infringing subsidiary?
There is no presumption of parental joint and several liability. However, under the CCA, if a corporation is a party to a CAU, related bodies corporate are taken (that is, legally deemed) to be a party to that CAU.
20. Are private actions and/or class actions available for infringement of the cartel rules?
Yes, private or class actions are available against cartel participants for damages as well as other relief. The ACCC may also make an application on behalf of other persons who have suﬀered loss or damage as a result of cartel conduct.
21. What type of damages can be recovered by claimants and how are they quantiﬁed?
The CCA does not provide any guidance as to how damages are to be quantiﬁed. While the cases state the measure of damages is similar to those recoverable under the common law in tort (that is, to put the person in the position they would have been in had the cartel conduct not occurred), damages are not conﬁned to those recoverable in tort.
22. On what grounds can a decision of the relevant authority be appealed?
First instance decisions of the Federal Court (single judge) can be appealed to the full Federal Court (usually three judges) on errors of law such as where the Court has applied an incorrect legal principle or ﬁndings of fact could not be supported by the evidence. Full Federal Court decisions can be appealed to the High Court, with leave. The High Court will only hear cases of signiﬁcant importance, such as on new points of law, to resolve questions of law decided inconsistently by lower courts, or on matters of public importance. In criminal cases, except in very limited circumstances, appeals must only involve questions of law, unless leave is granted.
23. What is the process for ﬁling an appeal?
An appeal can be initiated by either party within 28 days of the final orders by ﬁling a notice outlining the grounds of appeal.
24. What are some recent notable cartel cases (limited to one or two key examples, with a very short summary of the facts, decision and sanctions/level of ﬁne)?
In June 2022, in the sentencing of individuals for criminal cartel conduct for the first time in the Vina Money case, the Federal Court imposed the first ever custodial sentences on four individuals who pleaded guilty. The sentences ranged from 9 months, to two years and six months, although all were suspended, meaning no individual served term in gaol. Charges against a further individual who was contesting the charges were withdrawn shortly before the trial was to begin.
Vina Money operated a money remittance business in certain states in Australia. The charges concerned allegations of Vina Money fixing the price of the Australian dollar-Vietnamese done exchange rate and transaction fees with another company, Hong Vina. The individuals were charged with being knowingly concerned. Agreed facts before the Court included communications between the competitors and a large Vietnamese bank encouraging the competitors to agree on exchange rates instead of competing.
Since the Vina Money case, the ACCC and CDPP have secured further convictions from both corporations and individuals following guilty pleas. In the Alkaloids of Australia case, the company and its former export manager pleaded guilty to charges of making, attempting to make, and giving effect to several cartel arrangements with overseas pharmaceutical ingredient suppliers. In November 2022, the company was fined nearly $2m while the former export manager was sentenced to 2 years and 8 months’ imprisonment, the longest custodial sentence imposed to date, to be served by way of a intensive corrections order, including 400 hours of community service. Two further criminal matters involving guilty pleas from both corporations and individuals – Bingo Industries and Aussie Skips – are awaiting sentencing.
In civil cases, in December 2022, Justice O’Bryan of the Federal Court found BlueScope Steel Limited and a former employee attempted to induce certain participants in the steel industry to enter into price-fixing arrangements. The central claims in the ACCC’s case was that the former employee attempted to induce third party steel distributors to set their prices for flat steel products at or above BlueScope’s list or recommended resale price, in circumstances where BlueScope was vertically integrated and its wholly owned steel distributors competed with the external distributors. The hearing on remedies occurred in April 2023, with judgment pending.
25. What are the key recent trends (e.g. in terms of ﬁnes, sectors under investigation, applications for leniency, approach to settlement, number of appeals, impact of COVID-19 in enforcement practice – e.g. dawn raids of domestic premises, ‘hybrid’ in-person/virtual dawn raids etc.)?
Cartel prosecution remains a priority.
Cartels including criminal cartels remain a key ACCC enforcement priority in 2023, as does the prosecution of individuals and seeking custodial sentences for cartel conduct.
In 2022, the ACCC was successful in securing penalties in three civil cartel cases against NQ Cranes, ARM Architecture and First Class Roofing, all of which admitted the conduct, while four civil cases (including BlueScope Steel Limited – see Section 24 above) are before the courts.
As mentioned above (see Section 24), the ACCC has had a number of recent successes in securing guilty pleas in criminal cartel matters, which have resulted in the first custodial sentences being imposed on individuals since cartels were criminalised in Australia in July 2009 (Vina Money and Alkaloids of Australia cases), while two other criminal cases involving both corporations and individuals await sentencing (Bingo Industries and Aussie Skips).
The ACCC has stated publicly that there has been an uptick in applications for immunity following the imposition of custodial sentences against individuals for the first time. These applications may lead to further civil or criminal proceedings being brought, the latter being subject to the CDPP’s decision.
No convictions in contested criminal cases
The CDPP is, however, yet to secure a conviction in a criminal cartel matter where liability has been contested, with the accused in all contested cases to date either being acquitted or the charges withdrawn.
In the Country Care case, the CDPP alleged that Country Care, its managing director and a former employee engaged in pricing fixing and bid rigging conduct. Country Care supplies rehabilitative and assistive technology products under several government and other contracts, and direct to the general public. After a lengthy 12-week hearing, the jury unanimously acquitted all accused after four hours of deliberations.
The CDPP prosecution of Citigroup, Deutsche Bank and ANZ, and numerous bank executives (Bank cartel case) concerned allegations arising out an ANZ capital raising in August 2015 which resulted in a significant shortfall. Following investigation by the ACCC, the CDPP laid charges in 2018 and the matter spent close to two and half years at the committal stage in the New South Wales Local Court before the accused were committed to stand trial in the Federal Court. All remaining charges in the case were withdrawn in early 2022 after the CDPP had first withdrawn all charges against ANZ and two of its executives. The CDPP dropped the charges in accordance with the Prosecution Policy of the Commonwealth, stating that there were no longer reasonable prospects of convicting the accused.
The ACCC has subsequently instigated an internal review of the Bank Cartel case. While the failure of the case may not dampen the ACCC’s resolve to investigate and refer serious cartel conduct to the CDPP, it is expected that the ACCC will review and modify its approach in conducting criminal investigations to reflect learnings from the case. At the time of writing, no public statements have been made as to any process of policy changes as a result of the ACCC’s review.
The withdrawal of charges in the Bank Cartel case followed the CDPP withdrawing all charges against the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) and a union official for allegedly attempting to induce suppliers of scaffolding services to enter into cartel arrangements regarding prices for scaffolding services provided to builders in the Australian Capital Territory in 2012 to 2013.
As noted above, all charges were withdrawn against a fifth individual in the Vina Money case who was contesting the charges.
Ongoing trend of increasing penalties
The ACCC continues to seek, and the Courts are increasingly willing, to impose higher penalties for anticompetitive conduct including cartel conduct. The recent reforms to the maximum penalties and fines for anticompetitive conduct will assist in this regard, although the new maximums are more likely to have relevance for very large companies. In welcoming the reforms, ACCC Chair Ms Gina Cass-Gottlieb has made clear that these changes will allow the Courts to ensure that the penalties imposed are not seen as a “cost of doing business” but as something that should garner serious attention of owners and shareholders.
26. What are the key expected developments over the next 12 months (e.g. imminent statutory changes, procedural changes, upcoming decisions, etc.)?
At the time of writing, there are no proposed reforms which will impact on cartel laws in the next 12 months. However, the judge who presided over the now withdrawn Bank Cartel case has referred to the existing cartel provisions as “akin to producing a cryptic crossword”. Such comments could potentially ignite calls for future law reform in this area.
In addition to the ACCC proceedings against BlueScope for which judgment on remedies is expected in 2023 (see Section 24), there are several other civil cases currently before the Courts.
In May 2021, the ACCC instituted proceedings against Delta Building Automation Pty Ltd and its sole director for involvement in an alleged attempt to rig a bid in connection with a tender conducted by the National Gallery of Australia in Canberra in late 2019. The tender relates to the replacement and ongoing maintenance of a building management system at the gallery. The ACCC alleges that the sole director, on behalf of the company, attempted to make, or attempted to induce the making of, an arrangement or understanding with a competitor to fix the price of bids to ensure a successful tender during a meeting in December 2019. Notably, the competitor rejected the approach, and the National Gallery did not suffer any loss as a result. This matter is adjourned following final hearing.
In December 2022, the ACCC commenced proceedings against Qteq Pty Ltd, a mining equipment and technology services company and its executive Chairman, alleging seven instances where Qteq contacted competing businesses who supply services to the oil and gas industry and attempted to induce them to enter into cartel arrangements involving output restrictions, market sharing and rigging a tender.
In February 2023, the ACCC commenced proceedings against technology company Swift Networks alleging that on 5 occasions between 2017 and 2019, Swift made an agreement with a competitor that constituted bid rigging and price fixing when tendering to supply equipment and services to five mining village sites in the Pilbara region in Western Australia. This matter is listed for the first case management hearing on 3 May 2022.
There are currently two criminal cartel cases before the Federal Court, both of which involve the accused entering guilty pleas and concern the same cartel – namely, price fixing for demolition in waste services in Sydney. The first is against Bingo Industries and a former manager, where the sentencing hearing has occurred and the accused are awaiting judgment, The second is against Aussie Skips and an individual, with the sentencing hearing listed for 22-23 May 2023.