Whilst there has yet to be a criminal cartel prosecution brought by the ACCC, there is much interest in the potential for such action following the enactment of the Trade Practices Amendment (Cartel Conduct and Other Measures) Act 2009 (Cth)7 (cartel legislation). As readers will be aware, penalties for breaching the cartel legislation are significant. Heavy fines can be imposed on individuals and companies, and individuals face a potential 10-year imprisonment (amongst the longest sentences in the western world).
At the recent American Bar Association/International Bar Association Cartel Workshop in Paris in February, ACCC Chairman Graeme Samuel and Justice Middleton of the Federal Court were key note speakers. Mr Samuel advised how the ACCC is working with the Director of Public Prosecutions to try and secure a criminal prosecution against a company involved in cartel conduct. Justice Middleton explained how the Federal Court will handle cartel cases (via jury trials), but would not be drawn into providing specifics of penalties he envisaged might be considered appropriate.
At the conference, the following additional key observations were made:
- the ACCC treats any new investigation involving conduct (by contract, arrangement or understanding) which may contain elements of cartel behaviour as potentially criminal. Although most of these matters will not lead to criminal prosecution under the cartel legislation, it highlights the emphasis the ACCC places on detection and eventual prosecution. This point was also made by Mr Samuel at the recent American Bar Association International Law Conference8 held in Sydney.
Graeme Samuel has continually stated that it will be some time before a criminal case alleging cartel conduct will be brought before a court. He has expressed that ‘the ACCC will be advocating for the penalty regime to be used to its maximum effect.’9
- in a number of observations, Mr Samuel has compared the civil penalty regime in the USA pursued by the Department of Justice to the regime operating in Australia, where courts have imposed relatively low monetary civil penalties. He noted there is ‘growing international momentum to raise the stakes in anti-trust enforcement’.10
Mr Samuel has suggested that our courts should be encouraged to impose harsher penalties. Financial penalties for cartel conduct can now be the higher of $10 million, three times the total value of benefit from operating the cartel or 10% of the annual company turnover. Mr Samuel asserted that some companies under the former penalty regime viewed ‘cartel conduct [as] fairly good business’.11
Ongoing ACCC cartel cases (civil)
ACCC investigations into price-fixing and cartel behaviour by cargo airline carriers have continued with Korean Air Lines Co. Ltd being investigated recently.12 The ACCC alleges that between 2001 and 2006, the airline entered into arrangements or understandings with various cargo airlines that had the purpose or effect of fixing the price of a fuel and other surcharges and fees.13
The courts have imposed a total of $41 million in penalties against respondent airlines as a result of alleged fuel surcharge price fixing. Proceedings against Singapore Airlines Cargo Pte Ltd, Cathay Pacific Airways Ltd, Emirates, PT Garuda Indonesia Ltd and Thai Airways International Public Company Limited continue.
Other recent penalties for cartel behaviour include:
- an order by consent from the Federal Court for American based DRS C3 Systems to, amongst other things, pay $1 million for cartel behaviour in the military defence training systems industry,14 and
- an order by the Federal Court for APRIL Fine Paper Trading Pte Ltd and the related APRIL International Marketing Services Australia Pty Ltd to pay $4 million for breaching price fixing provisions in relation to copy paper and uncoated woodfree folio paper supplied to Australian customers,
the penalties in both cases were discounted by the court for cooperative behaviour. It should be noted that court imposed penalties are generally a result of an agreement reached between the parties and the ACCC.15