In 2013, the Australian Competition Consumer Commission (ACCC) commenced a detailed review of its 2009 Immunity Policy for Cartel Conduct (2009 Policy). Following the release of a draft updated Immunity and Cooperation Policy for Cartel Conduct (DraftImmunity Policy) in April 2014 for public comment, the ACCC has finalised its review.
On 10 September 2014, the ACCC published its updated Immunity and Cooperation Policy for Cartel Conduct (Immunity Policy) and supplementary frequently asked questions guide (FAQs) (see here). The Immunity Policy and FAQs replace the 2009 Policy and related interpretation guidelines.
The Immunity Policy and FAQs outline the ACCC’s current policy regarding:
- applications for immunity for cartel conduct, the granting of immunity and the conditions attached to a grant of immunity; and
- the provision of cooperation by other cartel participants that are ineligible for immunity and recognition of that cooperation in the form of leniency.
Key changes to the policy
The Immunity Policy does not differ substantially from the Draft Immunity Policy released in April 2014.
The Immunity Policy incorporates the following key changes:
- removing ‘clear leader’ as a disqualification for immunity – eligibility for immunity (as well as leniency) now requires that the applicant has not “coerced others to participate in the cartel”;
- streamlined process for granting conditional civil and criminal immunity – in an attempt to reduce delays in confirming conditional criminal immunity for cartel conduct, where the Commonwealth Director of Public Prosecutions (CDPP) decides to grant conditional criminal immunity, the CDPP will now ordinarily issue a letter of comfort first, prior to providing an undertaking;
- confidentiality waivers in international cartels – to facilitate the investigation of international cartels, the ACCC will “as a matter of course” request an applicant who has also sought immunity in other jurisdictions to provide a confidentiality waiver to allow the ACCC to share information with foreign regulators;
- guidance on civil leniency penalty reductions – the Immunity Policy sets out the specific factors that will be considered by the ACCC in determining the degree of penalty reductions, and that are ultimately proposed to the court prior to it determining the sanctions, where a cartel participant cooperates with the ACCC so as to obtain the benefits of leniency, which are as follows:
- in civil proceedings, the ACCC to make submissions to the Court recommending reduced sanctions/ a penalty discount; and
- in relation to criminal proceedings, the ACCC to make recommendations to the Commonwealth Director of Public Prosecutions (CDPP) as to the extent and value a party’s cooperation and assistance.
- guidance on proffer requirements – the FAQs set out guidance on the information to be included in a proffer (the “application” for immunity); and
- guidance on amnesty plus criteria – the Immunity Policy clarifies that availability of “amnesty plus”, which is an applicant’s entitlement to a larger reduction in civil penalties in relation a cartel in respect of which they provide cooperation, in circumstances where they are the immunity applicant in relation to a second cartel.
For further details, please see our earlier report here.
Where to from here for immunity?
The Immunity Policy is an important tool for the ACCC, acting as an incentive for cartel participants to provide information to the ACCC exposing cartels. As noted by Rod Sims, Chairman of the ACCC, in the ACCC’s media release on publishing the Immunity Policy and FAQs, “since the introduction of the ACCC’s cartel immunity program, the ACCC has received over 150 approaches”.
Despite this, however, there has not yet been a prosecution for criminal cartel conduct following the introduction of criminal penalties for cartel conduct in 2009.
Accordingly, one must ask the question, is there more to be done to encourage cartel participants to come forward?
In the context of the current Competition Policy Review (Harper Review), a number of submissions, in particular those of the ACCC and the Law Council of Australia, Business Law Section (Law Council), have been made regarding the effectiveness of the current regime and potential lessons to be learnt from foreign jurisdictions.
Whistle blower protection
Neither the Immunity Policy, nor the Competition and Consumer Act 2010 (Cth) (CCA), offer protections for whistleblowers, both cartel participants and third-party whistleblowers.
The ACCC submits that:
“greater protection should be available for whistle-blowers, through sanctions that deter intimidation and the creation of a third-party whistle-blower regime, modelled on the regime provided in the Corporations Act”.
The ACCC observes that despite the protections afforded by the immunity policy, when assisting ACCC investigations, individuals or corporations may still have concerns about intimidation or harm, which can pose a significant hurdle to obtaining crucial information for ACCC investigations.
Additionally, unlike the protections in the Corporations Act2001 (Cth), the Immunity Policy is only limited to conferring protection from ACCC civil action or a criminal prosecution by the CDPP. Therefore, it only applies to persons engaged in the contravention and it does not protect third-party whistle-blowers from action that may be taken to punish them for assisting the ACCC.
As such, the ACCC states that it strongly supports reform for higher penalties for intimidation and other coercive conduct, as well as the introduction of a third party whistle-blower regime which would apply to all informants.
As noted above, the Immunity Policy is only limited to conferring protection from ACCC civil action or a criminal prosecution by the CDPP. It does not provide protection from private enforcement actions for immunity applicants; an increasingly vexed issue.
The Law Council makes clear that it “does not support relieving an immunity applicant from all liability to pay compensation ... [however] the law should provide greater incentives for immunity applications.” The Law Council suggests that consideration should be given to the introduction of “bar orders” that are used in Canada and the United States, whereby parties to a class action may seek “bar orders” which block non-settling respondents from claiming contribution from a settling respondent, thus providing an incentive for a respondent to provide assistance to the private action, in exchange for a reduced damages liability. The Law Council considers that the introduction of bar orders in Australia would further encourage disclosure of cartel conduct.
The Immunity Policy and FAQs provide welcome guidance to the ACCC’s approach to immunity and leniency to the business community, in particular with regards the amendments to the CDPP’s process for granting criminal immunity, the removal of the “clear leader” disqualification and confirmation of the availability of “amnesty plus”. All of these changes are aimed at making the immunity process more attractive to cartel participants and easier to access.
Whilst the Harper Review is unlikely to make recommendations about the Immunity Policy, there may be additional recommendations to increase incentives for parties seeking immunity for cartel conduct – perhaps in the form of whistleblower protections or some form of protection from private enforcement actions.