Earlier this year, the ACCC announced that it is conducting a review of its immunity policy for cartel conduct. The immunity policy encourages businesses and individuals to disclose cartel behaviour, assisting the ACCC with their investigations and further discouraging businesses from engaging in such conduct. The ACCC has indicated that it will initially undertake an internal consultation process, involving members of the Commonwealth Director of Public Prosecutions and a number of practitioners specialising in competition law and the immunity policy. Whilst the ACCC’s review focuses on the effectiveness of enforcing competition law, a number of other jurisdictions have been reviewing the effectiveness of their cartel laws.
Substantial reforms to the competition regime are also underway in the UK, which are tipped to be the most fundamental and comprehensive set of reforms in recent years (previously blogged about here and here). In relation to the UK’s cartel laws, it is currently a criminal offence for two or more individuals in competing firms to dishonestly agree to engage in cartel conduct. The new legislation eliminates the requirement of dishonesty from the UK’s criminal cartel offence and introduces a number of exceptions and defences in an attempt to increase the rate of successful prosecutions.
Under the new exceptions an individual will not commit a cartel offence if customers are given ‘relevant information’ before entering into the arrangement or ‘relevant information’ is published in a manner established by the UK Secretary of State before the arrangements are implemented. Similarly, under the new defences an individual will not commit a cartel offence if at the time of making the agreement, he or she did not intend the nature of the arrangements to be concealed from customers, or before the agreement was made, he or she took reasonable steps to ensure that its nature would be disclosed to legal advisers for the purpose of obtaining advice before implementation.
To be introduced in April 2014, these reforms aim to target more serious cartel offences, where participants have engaged in elaborate behaviour to avoid detection. However, concern has been raised over the practical implications of these reforms. By removing the element of dishonesty, for example, is an individual guilty of an offence under the new legislation if they merely agree to fix prices? In which case, has the burden of proof been removed from the prosecutor, requiring the defendant to justify their actions? If this individual has attempted to obtain legal advice, is it a defence if they did not in fact obtain it? And what does ‘relevant information’ include?
Another area of reform in the UK is the new compulsory interviewing powers of the Competition and Markets Authority (CMA). The reforms authorise the CMA to require individuals associated with a company being investigated for a civil cartel offence, to answer oral and written questions. Currently, the UK’s Office of Fair Trading (OFT) can only compel an individual to provide basic information in a civil cartel investigation, unless consent has been received and a legal advisor is present.
In Europe there have been a series of recent legislative proposals and recommendations, with the European Commission (EC) promoting private enforcement of competition law breaches, whilst ensuring public enforcement regimes are still protected (previously blogged about here). Earlier this year, the EC published a proposed directive on collective redress mechanisms, suggesting collective action for injunctive or compensatory relief should be made “fair, equitable, timely and not prohibitively expensive”. The EC also published a directive in relation to bringing collective actions and quantifying harm for damages in order to improve a cartel victim’s access to evidence, compensation and the overall justice system. It is hoped that these proposals will increase the number of collective actions bought and compensatory relief recovered. For more information, please see KWM’s publication on Class Actions.
The question then to be asked is whether these reforms will impact the ACCC’s review or whether the focus is really on enforcing our current laws through an improved immunity policy? To date, there have been no criminal prosecutions since the introduction of criminal penalties in 2009. It is difficult to imagine that this is because there is no cartel activity in Australia or the law is not capturing such conduct under these provisions. Does the answer therefore lie in reviewing the role, operation and effectiveness of the ACCC’s immunity policy or is it simply a question of improving awareness amongst businesses and the broader community of the immunity policy and the criminal consequences of cartel conduct?