This week, Japanese shipping company Nippon Yusen Kabushiki Kaisha (NYK) pleaded guilty to criminal cartel conduct in the Federal Court. It is the first time, since the criminal cartel conduct provisions were introduced on 24 July 2009, that criminal charges have been deployed in Australia ‒ and, as Australia's competition regulator indicated following yesterday's hearing, it is unlikely to be the last:

"We have 10 to 12 detailed investigations under way and we're trying to lay the platform for a continuing stream of criminal cartels."

Background

On 14 July 2016, the Commonwealth Director of Public Prosecutions (DPP) (equivalent to the Crown Prosecution Service in the United Kingdom) filed criminal proceedings against NYK on a reference from the ACCC.

It is alleged that NYK participated in cartel conduct with other global shipping companies in connection with the transportation of vehicles, including cars, trucks, and buses, from Japan to Australia between 24 July 2009 and 6 September2012.

It does not appear that any individuals will be charged as part of the case against NYK.

Next steps

NYK'sguilty plea obviates the necessity for any liability phase. The matter has therefore been listed for further directions on 12 September 2016and at that time is likely to be set down for sentencing, which we expect will occur by calendar year's end.

Under Australian criminal sentencing principles, it is not open to the prosecutor to reach any agreement with the defendant as to the appropriate fine and nor can any joint submission be made to the court as to what that fine may be or the range of fines that would be appropriate. The court will therefore impose the first criminal fine by reference to general sentencing principles.

Since NYK and the DPP appear to be in broad agreement on facts and evidence, we expect that the only substantive issue for debate on 12 September 2016 will be the question of quantum.

For corporations, the maximum fine for each criminal cartel offence will be the greater of:

  • $10 million;
  • three times the total benefits that have been obtained and are reasonably attributable to the commission of the offence;
  • if the total value of the benefits cannot be determined,10% of the corporation’s annual turnover connected with Australia.