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Trends and climate

Trends Have there been any recent changes to the cartel regime? If so, have they had a significant impact on enforcement activity?

There have been no recent legislative changes to Australia's cartel laws, although changes are expected to be introduced during the course of 2017 (see below). 

Are there any proposals to reform or amend the existing cartel regime?

The government has introduced the Competition Policy Review Bill to amend Australia's competition law. The bill proposes, among other things:

  • that cartel conduct must take place in trade or commerce in order to be captured by the Australian cartel laws; ‘trade or commerce’ will be defined as conduct occurring in Australia or between Australia and places outside Australia;
  • to repeal the per se prohibition on exclusionary provisions; however, the bill proposes to extend the cartel prohibition to include the acquisition, or likely acquisition, of goods or services; and
  • to amend the exception from the cartel laws for certain joint venture agreements by:
    • extending the joint venture exception, which at present applies to joint ventures only “for the production or supply of goods or services”, so that it also applies to joint ventures for the acquisition of goods or services;
    • broadening the joint venture exception, which at present applies only if the cartel provision is contained in a contract (with some limited exceptions), so that it applies to cartel provisions which are contained in a “contract, arrangement or understanding"; and 
    • imposing additional requirements on the joint venture exception, which at present applies only if the cartel provision in the contract is for the purposes of the joint venture, so that:
      • the cartel provision is reasonably necessary for undertaking the joint venture; and
      • the joint venture is not being carried on for the purpose of substantially lessening competition.

Have there been any recent key cases?

Cartel conduct may give rise to civil or criminal liability. Several civil cases have been concluded under the present cartel provisions:

  • Norcast SárL v Bradken Limited (No 2) ((2013) FCA 235 (March 19 2013));
  • Australian Competition and Consumer Commission (ACCC) v Olex Australia Pty Ltd ((2017) FCA 222 (March 9 2017));
  • ACCC v Australian Egg Corporation Limited ((2016) FCA 69 (February 10 2016)); and
  • ACCC v Australia and New Zealand Banking Group Limited ((2016) FCA 1516 (December 14 2016)).

In 2016 the Office of the Commonwealth Director of Public Prosecutions (CDPP) laid charges in the first criminal prosecutions under the criminal cartel provisions of the Competition and Consumer Act 2010 (Cth) and these cases are still ongoing.

In addition, although they related to the laws in place before the present Competition and Consumer Act, the principles from the High Court's decision in ACCC v Flight Centre Travel ((2016) HCA 49) remain relevant when applying the law. In Flight Centre the High Court found that travel agency Flight Centre had competed with airlines in the sale of international airline tickets and attempted to induce three major airlines to enter into price-fixing arrangements. Flight Centre sold tickets on a number of airlines and received commission on these sales. The ACCC alleged that Flight Centre had attempted to induce Singapore Airlines, Malaysian Airlines and Emirates to agree that any particular airfare offered directly to customers by airlines would also be made available to Flight Centre, and that the airlines would not undercut Flight Centre's prices. The High Court held that Flight Centre was a competitor of the airlines because it enjoyed a level of discretion and independence that was inconsistent with that of an agent. 

Criminal cases In July 2016 the CDPP laid the first criminal charges under the Competition and Consumer Act for alleged cartel conduct in relation to conduct in the shipping industry. Following an investigation by the ACCC, defendant Nippon Yusen Kabushiki Kaisha pleaded guilty to criminal cartel conduct in the Federal Court. A sentencing hearing took place on April 11 2017 and judgment has been reserved.

In November 2016 the CDPP laid criminal charges for cartel conduct in the same industry against Kawasaki Kisen Kaisha (K-Line). At the time of writing, K-Line has not entered a plea and the case is ongoing.

Legal framework

Legislation Which legislation applies to cartels and what are the relevant substantive provisions?

Australia's competition legislation is the Competition and Consumer Act. The cartel provisions are contained in Part IV, Division 1 of the act.

It is a civil or criminal offence to make or give effect to a contract, arrangement or understanding between actual or potential competitors that contains a cartel provision.

A ‘cartel provision’ is a provision that has:

  • 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 production, capacity or supply of goods or services by any or all of the parties;
    • allocating the customers or territories supplied by any or all of the parties; or
    • rigging bids.

Cartel conduct is prohibited outright, regardless of its effect on competition. To establish criminal liability, it is not necessary to show dishonesty or that the conduct was known to be illegal. However, the elements of the offence must be proved to the criminal standard (ie, beyond reasonable doubt).

Institutions Which bodies are the relevant regulatory and prosecutory authorities and what are their specific roles?

The Australian Competition and Consumer Commission (ACCC) investigates alleged cartel conduct and determines whether to bring civil proceedings. The Office of the Commonwealth Director of Public Prosecutions (CDPP) determines whether to bring criminal proceedings for alleged cartel conduct.

Ultimately, it is the Federal Court (or the state supreme court in some criminal cases) that determines whether the civil or criminal prohibitions on cartel conduct have been contravened and the appropriate sanctions and penalties.

Are there any sectoral regulators with concurrent powers?

No.

Application Does the legislation apply to both formal agreements and informal practices?

Yes, the legislation applies to contracts, arrangements and understandings.

To establish the existence of a contract, arrangement or understanding, the ACCC must demonstrate:

  • direct or indirect communication between the parties;
  • a consensus or meeting of minds between the parties as to what is to be done; and
  • a commitment by at least one party.

Does the legislation apply to individuals, companies or both?

Both.

Does the legislation subject companies to civil liability, criminal liability or both?

Companies found to have engaged in cartel conduct face civil and/or criminal law penalties.

The maximum civil penalty or criminal fine for each contravention is the greater of:

  • A$10 million;
  • three times the total benefits that have been obtained and are reasonably attributable to the commission of the offence; or
  • if the benefit cannot be determined, 10% of the corporate group’s annual turnover attributable to Australia.

If multiple contraventions have occurred, a penalty for each contravention may be applicable. 

Does the legislation subject individuals to civil liability, criminal liability or both?

Individuals found to have engaged in cartel conduct face civil and/or criminal law penalties.

The maximum civil penalty is A$500,000 for each contravention. The maximum criminal penalty is 10 years’ imprisonment and/or fines of up to A$420,000 for each contravention.

Where cartel conduct is punishable by both civil and criminal penalties, can the enforcement authority pursue both types of penalty? How does the authority decide which penalties to seek?

There are some limitations on the commencement of both criminal and civil proceedings for substantially the same conduct:

  • A criminal conviction in respect of cartel conduct will preclude a subsequent civil proceeding being brought in respect of substantially the same conduct; and
  • Civil proceedings will be stayed if criminal proceedings are commenced in relation to substantially the same conduct. The civil proceedings may be resumed if the person is not convicted of a criminal offence.

However, the Competition and Consumer Act does not preclude the imposition of criminal sanctions in respect of cartel conduct that is substantially the same conduct, regardless of whether a civil penalty has already been imposed.

The ACCC will generally refer ‘serious cartel conduct’ to the CDPP for consideration for prosecution. 

Are there any sector-specific offences or exemptions?

Yes. There are sector-specific prohibitions for the banking sector and sector-specific exemptions for the container liner shipping industry, although these are due to be replaced with a concerted practices prohibition.

Price signalling laws in the banking sector There is a sector-specific prohibition relating to price signalling in the banking sector. The price signalling provisions prohibit banks from disclosing:

  • in private, pricing information to competitors – except in limited circumstances; and
  • in public or private, information relating to price, capacity or commercial strategy, where the disclosure is made for the purpose of substantially lessening competition.

Container liner shipping exemption Part X of the Competition and Consumer Act deals with the regulation of international liner shipping of cargo travelling to or from Australia. Under Part X, certain conference agreements are exempt from the cartel prohibitions, provided that these are registered with the registrar of liner shipping at the Department of Infrastructure and Regional Development.

General exemptions There are also a number of general exemptions to the cartel prohibitions, including:

  • joint ventures;
  • related bodies corporate;
  • dual-listed company arrangements; and
  • exclusive dealing. 

To what extent, if any, does the legislation apply to extraterritorial conduct?

The cartel provisions apply to extraterritorial conduct – in particular, to conduct engaged in outside Australia by:

  • companies incorporated in Australia;
  • companies carrying on business in Australia;
  • Australian citizens; or
  • companies or persons ordinarily resident in Australia.

The courts have broadly construed the 'carrying on business' test.

The Competition Policy Review Bill proposes to amend cartel prohibitions to clarify that cartel conduct must take place in trade or commerce. 

Investigations

Initiating an investigation Who can initiate an investigation of potential cartel conduct?

The Australian Competition and Consumer Commission (ACCC) has the power to initiate an investigation in relation to cartel conduct. Following the investigation, the ACCC can initiate civil proceedings in the Federal Court for civil pecuniary penalties and other orders. The ACCC may also refer the matter to the Office of the Commonwealth Director of Public Prosecutions (CDPP) to consider whether to bring criminal proceedings.

If an investigation is initiated by complainants or third parties, what rights (if any) do they have?

Complainants or persons who may have suffered loss as a result of cartel conduct do not have any special rights in relation to ACCC investigations. Third parties may complain of cartel conduct to the ACCC, but the ACCC need not investigate or follow any formal process in relation to how the complaint is handled.

What obligations does a company have on learning that an investigation has commenced?

There is no obligation to cooperate with an ACCC investigation. However, companies are required to retain documents for prescribed periods. In some states, it may also be a criminal offence to destroy, conceal or otherwise interfere with a document that is likely to be required as evidence in a legal proceeding.

In addition, it is common for the ACCC to issue a statutory notice during investigations (referred to as a Section 155 notice) seeking information or documents. The ACCC can also issue a Section 155 notice requiring a person to attend the ACCC offices for an examination. Refusal or failure to comply with a Section 155 notice, or the provision of false or misleading information, is a criminal offence punishable by fines of up to A$4,200 and/or 12 months’ imprisonment for individuals, or fines of up to A$21,000 for companies.

What obligations does a company have if it believes that an investigation is likely?

See above in relation to when an investigation has commenced.

What are the potential consequences of failing to act or delaying action?

Delaying action or failing to act early in relation to an ACCC investigation may be harmful to a party's interests if the ACCC decides to take action later. Courts will also take into account any cooperation provided to the ACCC when considering penalties.

Formal stages of investigation What are the formal stages of and approximate timeframe for investigations?

The ACCC has discretion in relation to both the timeframe and the conduct (including stages) of an investigation. Investigations may take months or even years depending on the nature of the conduct being investigated. 

Investigative powers What investigative powers do the authorities have?

The most common investigatory tool used by the ACCC is its information-gathering power under Section 155 of the Competition and Consumer Act. Where the ACCC has reason to believe that a person can provide information or documents relating to a possible contravention of the act, it can require such person to provide information, produce documents or appear before the ACCC to give evidence orally under oath or affirmation. The ACCC cannot issue a Section 155 notice after it has instituted proceedings, except where it is seeking an interlocutory injunction.

The ACCC also has the power to enter premises (so-called 'dawn raids') to conduct searches and seize documents where it has reasonable grounds to believe that there is evidentiary material on the premises relevant to a contravention of the Competition and Consumer Act. The ACCC must obtain a search warrant or the occupier's consent before entering the premises.

The ACCC may also seek access to telephone interception and surveillance material collected by the Australian Federal Police or other interception agencies under a warrant issued by the Federal Court or the Australian Administrative Tribunal during investigation of cartel offences.

What is the geographic reach of public enforcement actions?

Section 155 notices can be issued to any person. If the recipient of a Section 155 notice is in Australia, the notice may compel the provision of any documents in the recipient's possession, power or control, which may extend to documents held outside Australia in certain circumstances. The ACCC may face practical and legal impediments in exercising its information gathering powers outside the jurisdiction.

When is court approval required to invoke these powers?

The ACCC is not required to obtain court approval before issuing a Section 155 notice.

Unless the ACCC obtains the occupier's consent, it must obtain a warrant before conducting a raid. 

Are searches of business and personal premises authorised? If so, which bodies carry out searches and will they wait for legal advisers to arrive?

The ACCC may conduct searches of business or personal premises. Searches are carried out by members of the ACCC staff and potentially members of the Australian Federal Police or external consultants authorised by an ACCC inspector.

The Competition and Consumer Act imposes no legal requirement on the ACCC to wait for the occupier's legal advisers to arrive; however, in practice the ACCC may agree to wait a reasonable time.

What level of cooperation with the authorities is required and what are the consequences for failing to cooperate?

Parties subject to a raid must provide all reasonable facilities and assistance for the effective execution of the raid. Parties must also answer questions and manage the production of evidential material to which the warrant relates. The consequences for failing to comply with these obligations are similar to those for failing to comply with a Section 155 notice.

Is in-house legal advice or attorney work product protected by the law of privilege? Does this extend to the advice of in-house counsel?

Documents and materials subject to a claim of legal professional privilege are protected from disclosure to the ACCC, including where they respond to the terms of a Section 155 notice or are seized pursuant to a search warrant. This principle extends to documents and materials made or received by in-house counsel.

Are any other limitations imposed on investigatory powers in order to safeguard the rights of those under investigation?

Where the ACCC issues a Section 155 notice, a person will not be excused from producing a document or furnishing information on the ground that he or she might be incriminated or exposed to a penalty. However, any potentially incriminating answer or information provided by the individual cannot be used against him or her in criminal proceedings – except in criminal proceedings for failing to respond to a Section 155 notice or providing false or misleading information.

What is the process for objecting to an authority’s exercise of its claimed powers?

A person may apply to the court for a declaration in relation to the validity of any act or thing done, proposed to be done or purporting to be done under the Competition and Consumer Act. However, such challenges are generally limited to judicial review of the ACCC's decision to exercise its power.

Further, if a person considers that he or she cannot comply with a request contained in a Section 155 notice – either in time or because the notice is unduly burdensome – her or she may request that the ACCC vary the notice. The Competition Policy Review Bill proposes to introduce a 'reasonable search' defence, whereby parties would need to produce documents that they locate only after undertaking a reasonable search.

Publicity and confidentiality What information about investigations will be made publicly available and at which stage(s) of the process?

The ACCC generally conducts investigations confidentially. However, it may publicly comment on an investigation which is already public and where it considers that it is in the public interest to comment. The ACCC may also comment in general terms on an investigation where it is requested to do so by Parliament (eg, at a Senate inquiry). 

Is any information automatically confidential and is confidentiality available on request?

While confidentiality measures are in place, the circumstances in which the ACCC is entitled to disclose protected information (ie, information given to the ACCC in confidence, obtained under a Section 155 notice or given in confidence by a foreign government body) are broad. Such circumstances include where:

  • the ACCC makes a disclosure in the performance of its duties or functions;
  • the ACCC is required or permitted by law to make the disclosure (eg, when ordered by a court under subpoena, except in relation to protected cartel information (see below));
  • disclosure is made to the minister, royal commission or designated government agencies to assist those agencies; and
  • disclosure is made to a foreign government body or agency to perform or exercise its functions or powers.

Additional confidentiality measures are in place where the information relates to cartel conduct and is provided in confidence (referred to as 'protected cartel information'):

  • If the ACCC is party to the proceedings, it is not required to produce protected cartel information to a court or tribunal, except with leave of a court or tribunal.
  • If the ACCC is not a party to the proceedings (eg, a follow-on damages claim), it has discretion to disclose protected cartel information.

In exercising discretion to disclose or order disclosure of protected cartel information, the court, tribunal or ACCC will have regard to:

  • the need to avoid disruption to national and international law enforcement efforts;
  • whether information was given by an informant;
  • the protection or safety of the informant or associates;
  • the fact that disclosure of the information may discourage informants from giving information in the future; and
  • whether disclosure would be in the interests of justice or securing effective performance of the tribunal's functions.

Once proceedings are issued, a party may apply to the court seeking a confidentiality order. The court has a wide discretion to grant confidentiality orders and these are generally granted in relation to documents that are commercially sensitive or prejudicial to the interests of certain parties.

International cooperation Do the authorities in your jurisdiction cooperate with authorities in other jurisdictions?

The ACCC can and does coordinate its enforcement efforts with overseas regulators. It is a member of the International Competition Network, which provides competition authorities with an informal forum for maintaining regular contacts and addressing practical competition concerns.

Australia is party to a treaty with the United States, which allows both countries to cooperate, provide assistance and exchange information in competition law and antitrust enforcement actions. The ACCC is also party to a number of memoranda of understanding with various authorities, including regulators in Canada, New Zealand, the European Union, China, Korea and the United Kingdom. These memoranda of understanding provide for varying levels of cooperation and communication in respect of enforcement activities. 

Do the relevant enforcement authorities request waivers so as to allow for increased cooperation with authorities in other jurisdictions? What are the consequences of declining to grant a waiver?

The ACCC has broad discretion to disclose protected information (see above) to foreign government bodies or agencies if it is satisfied that the information will assist them. Therefore, the ACCC need not obtain a waiver to disclose such information.

However, the ACCC's policy provides that – except as required by law – it will not share confidential information provided by an immunity applicant (including the applicant’s identity) with other regulators, without the applicant’s consent. The ACCC will seek consent to do so as a matter of course, particularly for international matters.

The ACCC's immunity policy provides that the applicant must explain why a waiver cannot be provided. Failure to provide a satisfactory explanation may be regarded as a failure to provide the full cooperation required to be eligible for immunity.

Decisions How is a cartel investigation resolved? Are settlements, plea bargains or other negotiated resolutions available?

While the ACCC and the CDPP have discretion to determine whether to bring proceedings, neither has the power to impose a penalty or fine. A penalty or fine can be imposed only by the court.

Civil offences Cartel cases are generally resolved through the court system. However, the ACCC may agree to make joint submissions to the court, including submissions that the respondent should receive a lower penalty if the ACCC is satisfied that it has substantively cooperated. In civil matters, the ACCC may also agree on a penalty with the respondent to be proposed to the court. The court must then determine whether the penalty is appropriate in the circumstances.

Agreeing a penalty generally involves the ACCC and the respondent:

  • agreeing to a statement of facts and the scope of admissions; and
  • making joint submissions as to reasons why the penalty is appropriate.

However, the court may disregard these submissions and impose a penalty which is higher or lower than the range agreed (see below).

Criminal offences Sentences in criminal cases are at the discretion of the court. The court will take into account a range of factors, including:

  • the degree to which the person has shown contrition and cooperated with law enforcement agencies during the investigation (see below); and
  • whether the person has pleaded guilty to the charge in respect of the offence.

While in criminal cases it is not appropriate for the ACCC, the CDPP and the parties to agree a penalty and propose this to the court for approval, they can provide a penalty range. 

What is the process for negotiating a settlement, plea bargain or other negotiated resolution? Do such resolutions require court or other approval?

See above.

If a settlement is not reached, what is the procedure for adjudicating a charge of cartel conduct?

If the respondent does not admit liability and contests the matter, the case will go to civil trial on liability. At trial, evidence will be admitted and submissions made by the parties.

In criminal cases, the defendant will be committed to stand trial and the matter may then be referred to a higher court for a criminal trial.

Which party must prove its case? What is the relevant standard of proof?

The party alleging the existence of the cartel conduct – usually the ACCC but occasionally a third party – bears the burden of proof. In civil matters, the applicant must prove its case on the balance of probabilities. In criminal trials, the standard is higher – the CDPP must prove its case beyond reasonable doubt. 

Is there a hearing? If so, what is the process for submitting evidence and testimony?

Civil proceedings in the Federal Court are commenced when the applicant files an originating application.

Written evidence is usually submitted in affidavit form, including supporting documentation. A party can also issue a subpoena requiring a person to appear as a witness to give evidence or produce documents. A party can also apply to the court for the appointment of an expert (eg, an expert economist) to produce a report to be submitted to the court and used in evidence. Orders for discovery may also be made.

The matter will then proceed to a hearing, where witnesses and experts may be subject to cross-examination. The parties will also make written and oral submissions.

Once the CDPP has decided to lay charges for a criminal cartel offence, an initiating process or summons will be sent to the defendant and filed with the court. A committal hearing then takes place, in which a magistrate decides if there is sufficient evidence for the matter to proceed to a criminal trial. The CDPP will then file an indictment listing the relevant charges. During the trial, the CDPP may call witnesses and produce other forms of evidence. Following the delivery of the verdict, the judge will sentence the defendant – this may include a fine and/or term of imprisonment.

What are the accused’s procedural rights?

In civil proceedings, respondents may request copies of all documents in the ACCC's possession which tend to establish the respondent's case and were not created by the ACCC itself or obtained from the respondent. 

In criminal proceedings, the CDPP owes a duty of disclosure to the court. Under common law principles, defendants are entitled to know the case against them, including the evidence that supports the charges and any other material relevant to the defence. These principles are supplemented by state and territory legislation, which requires the prosecution to disclose certain material to defendants. The Statement on Disclosure in Prosecutions by the Commonwealth sets out the CDPP's disclosure obligations, in addition to the requirements under state or territory legislation.

Respondents also enjoy any usual rights, including legal professional privilege and, in criminal matters, the privilege against self-incrimination for individuals (see above). 

Appeal process What is the appeal process?

Appeals from a single Federal Court judge can be heard by the full Federal Court – usually comprising three judges – on points of law. Parties may appeal full Federal Court decisions to the High Court if it grants permission. The special leave process involves assessing a number of relevant factors, including:

  • the public importance of the case;
  • any uncertainty in the area of law; and
  • the administration of justice.

If the case is a criminal matter before the Supreme Court, appeals are heard by the appeals division or the full bench of the Supreme Court in that state. Parties can appeal further by applying for special leave to the High Court.

To what extent can the appeal body review the agency’s findings of fact, legal assessment and penalties?

The substantive proceeding is decided by the court, not the ACCC. Appeals of a court judgment are confined to points of law, not findings of fact – in relation to both the substantive proceeding and the penalties imposed. 

Penalties

Penalties for companies What are the potential penalties for companies involved in a cartel?

Companies found to have engaged in cartel conduct face civil and/or criminal law penalties.

The maximum civil penalty or criminal fine for each contravention is the greater of:

  • A$10 million;
  • three times the total benefits that have been obtained and are reasonably attributable to the commission of the offence; or
  • if the benefit cannot be determined, 10% of the corporate group’s annual turnover attributable to Australia.

If multiple contraventions have occurred, a penalty for each contravention may be applicable. 

Are there guidelines in place for penalties? If not, how are penalties normally calculated?

The court determines whether penalties or other sanctions should be imposed and, if so, the quantum of these.

Civil penalties The court must have regard to all relevant matters when determining the pecuniary penalty to be imposed. While general and specific deterrence are key factors, the court will also have regard to:

  • the nature, extent and timeframe of the conduct;
  • loss or damage caused;
  • the size of the company;
  • the degree of market power;
  • deliberateness of the conduct;
  • the seniority of those involved;
  • the company's corporate culture regarding compliance;
  • the level of cooperation with the authorities;
  • instances of prior contraventions; and
  • the party’s financial position.

Criminal penalties When imposing criminal penalties, the court will have regard to general and specific deterrence, as well as retribution and rehabilitation. During sentencing, the court must take into account a number of factors, including those considered under civil penalties (see above), as well as:

  • whether the offence is part of a course of conduct;
  • contrition;
  • a guilty plea; and
  • prospects for rehabilitation.

Do the authorities take into account any penalties imposed in other jurisdictions?

The court need not take into account any penalties imposed in other jurisdictions.

The Australian Competition and Consumer Commission (ACCC) has recently been seeking larger penalties for cartel conduct, partly because the fines imposed in other jurisdictions are significantly higher than those imposed in Australia.

How can a company mitigate its exposure to fines?

A company can seek to mitigate its exposure to penalties by cooperating with the ACCC during the investigation or seeking immunity in the first place.

Civil matters Cooperation The ACCC has a cooperation policy which outlines its position on cooperation by individuals and corporations in enforcement matters.

The ACCC will make submissions to the court identifying the extent and value of any cooperation provided by a party to the proceedings. In certain circumstances, the ACCC and other parties may propose an agreed civil penalty to the court. However, the appropriate penalty is ultimately a matter for the court to determine. In doing so, the court will consider the extent to which the respondent has cooperated with the ACCC.

Immunity The ACCC is responsible for granting civil immunity, which is available to the first eligible party to disclose the cartel conduct. The ‘first eligible party’ is the first to apply for immunity in respect of the cartel under the ACCC's immunity policy.

If the ACCC grants conditional immunity, the applicant 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. Conditional civil immunity will become final immunity after the resolution of any ensuing proceedings against the remaining cartel participants.

Criminal matters Cooperation If a party cooperates with the ACCC during a criminal investigation, the ACCC may make a recommendation to the Office of the Commonwealth Director of Public Prosecutions (CDPP) regarding penalty discounts. Further, the CDPP may give concessions in exchange for a party's testimony in certain circumstances.

When determining the sentence, a court must take into account mitigating factors, including:

  • contrition (eg, reparations);
  • a guilty plea; and
  • the level of cooperation.

Immunity The CDPP is responsible for granting criminal immunity. Although its decision will be based on a recommendation by the ACCC, it will exercise its own discretion when considering the recommendation.

The CDPP will grant criminal immunity where it considers that the applicant meets the criteria set out in Annexure B to the Prosecution Policy of the Commonwealth, which contains the CDPP immunity policy in relation to cartel conduct. This is the same criteria that the ACCC applies in civil cases when determining whether to grant civil immunity.

Before instituting criminal proceedings against the other cartel participants, the CDPP will provide to the applicant a letter of comfort and a written undertaking, granting immunity subject to fulfilment of ongoing obligations and conditions. Once these conditions have been fulfilled by the applicant, the immunity becomes final. 

Penalties for individuals What are the potential penalties for individuals involved in a cartel?

Individuals found to have engaged in cartel conduct face civil and/or criminal law penalties.

The maximum civil penalty is A$500,000 for each contravention. The maximum criminal penalty is 10 years’ imprisonment and/or fines of up to A$420,000 for each contravention.

Do the authorities take into account any penalties imposed in other jurisdictions?

The court need not take into account any penalties imposed on the respondent in other jurisdictions.

Is a company permitted to pay a penalty imposed on its employee?

Civil penalties

A company must not indemnify a person against civil liability or legal costs incurred in defending or resisting proceedings in which he or she is found to have incurred such liability as a company officer.

Criminal penalties A company must not indemnify a person against any liability incurred as a company officer that is owed to a party other than the company and did not arise out of conduct in good faith. This prohibits indemnification of company officers for involvement in cartel conduct.

A company also must not indemnify a person against legal costs incurred in defending or resisting an action for liability incurred as an officer in criminal proceedings in which he or she is found guilty.

Is a company permitted to continue to employ an employee involved in cartel conduct?

The Competition and Consumer Act does not expressly prohibit a company from continuing to employ an employee who has been involved in cartel conduct.

However, if the court is satisfied that the employee has contravened a cartel provision, it can make an order disqualifying that person from managing corporations for an appropriate period. In such cases, the company would no longer be able to employ the person in a management role.

Both the ACCC and the CDPP can apply for a disqualification order. 

Private actions

Private damages actions Can private actions for damages be brought in your jurisdiction? If so, who may assert such actions?

Private parties which have suffered loss or damage as a result of cartel conduct may bring an action for damages against the cartel participants (including any immunity applicant). Private parties may also seek a range of other orders (see below).

The Australian Competition and Consumer Commission (ACCC) can also take a form of representative proceeding on behalf of private parties which have suffered loss or damage as a result of cartel conduct.

In addition, Australia has an established and active system of class actions (see below).

What relief may be awarded to successful claimants (eg, damages, costs, injunctive relief or attorneys’ fees)?

Remedies for private actions include:

  • damages;
  • injunctive relief; and
  • other orders, including:
    • declaring all or part of a contract void;
    • varying a contract as appropriate;
    • refusing to enforce a contract;
    • refunding money or returning property;
    • granting compensatory damages;
    • repairing or providing parts for goods;
    • supplying specified services; and
    • varying or terminating an instrument creating or transferring an interest in land.

The court may also award costs.

How are the amounts of any damages, costs or attorneys’ fees calculated?

The objective of damages is to compensate the applicant for the loss or damage suffered. It is likely that courts will assess damages by comparing the position that the applicant is in with the position that it would have been in but for the conduct.

Standard rules apply to the calculation of costs. The court will order the successful party an award of costs, which will generally be the party/party costs incurred during the proceedings.

Have there been any notable recent cases in which a private action was the subject of adjudication?

Two private enforcement proceedings were commenced against Visy and Amcor arising out of the corrugated packaging industry cartel. One of these actions was taken by Cadbury Schweppes and was settled on confidential terms. The other was a class action for damages by a group of customers, which settled for A$95 million.

The ACCC’s successful prosecution of international airlines for entering into price-fixing arrangements for the provision of air freight services led to a class action, which resulted in a A$38 million settlement.

Class actions Can class actions be brought in your jurisdiction? If so, what is the procedure for such cases?

Yes. The essential requirements for bringing a class action are set out in Section 33C of the Federal Court of Australia Act 1976 (Cth), which provides that:

  • there must be seven or more persons with claims against the same person;
  • the claims must be in respect of or arise out of the same, similar or related circumstances; and
  • the claims must give rise to one substantial common issue of law or fact.

Under the class action regime, individuals can opt out of the proceedings and bring their own action if they wish.

Immunity and leniency

Immunity and leniency programmes Is an immunity and leniency programme available for companies? If so, how does it operate?

Civil immunity

The Australian Competition and Consumer Commission (ACCC) is responsible for granting civil immunity. This is available to the first eligible party to disclose the cartel conduct. The ‘first eligible party’ is the first to apply for immunity in respect of the cartel under the ACCC immunity policy.

Other criteria for eligibility include:

  • the ACCC has received no legal advice that it has reasonable grounds to institute proceedings in relation to at least one contravention of the Competition and Consumer Act arising from the cartel conduct;
  • the applicant has not coerced others to participate in the cartel;
  • the applicant admits that its conduct may constitute a contravention of the Competition and Consumer Act; and
  • the applicant either has ceased or indicates that it will cease its involvement in the cartel.

If the ACCC grants conditional immunity, the applicant 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. Conditional civil immunity will become final immunity after the resolution of any ensuing proceedings against the remaining cartel participants.

Criminal immunity See below.

Can the enforcement authority decline or withdraw leniency? If so, on what basis?

Yes. The ACCC can decline immunity on the basis that the party is not 'first in' or does not meet the criteria for immunity. The ACCC can also revoke immunity where the applicant has breached the conditions of immunity (eg, where the applicant has not cooperated sufficiently with the ACCC's investigation).

Are there benefits for cooperators that do not qualify for immunity? If so, how are these benefits determined?

Cooperation with the ACCC may result in lower penalties. However, the ultimate decision as to the appropriate penalty or fine rests with the court.

In civil matters, the ACCC will make submissions to the court identifying the extent and value of any cooperation provided by a party to the proceedings. In certain circumstances, the ACCC and other parties may propose an agreed civil penalty to the court. However, the appropriate penalty is ultimately a matter for the court to determine. In doing so, the court will consider the extent to which the respondent has cooperated with the ACCC.

If a party cooperates with the ACCC during a criminal investigation, the ACCC may make a recommendation to the Office of the Commonwealth Director of Public Prosecutions (CDPP) regarding penalty discounts. Further, the CDPP may give concessions in exchange for a party's testimony in certain circumstances.

When determining the sentence, a court must take into account mitigating factors, including:

  • contrition (eg, reparations);
  • a guilty plea; and
  • the level of cooperation.

What benefits (if any) are available for employees and former employees of a company that seeks leniency?

If a corporation qualifies for conditional immunity, it may seek derivative immunity for present and former directors, officers and employees who were involved in the cartel conduct.

At the time of applying for immunity, the corporation must list all former directors, officers and employees seeking derivative immunity who are known at that time to have been involved in the cartel conduct.

To be eligible for derivative immunity, the individual must be a present director, officer or employee of the corporation that qualifies for conditional immunity or have been a director, officer or employee of the corporation during the relevant period of cartel conduct. The employee must also satisfy the general requirements for eligibility, including providing full, frank and truthful disclosure. 

Is an immunity or leniency programme specifically available for individuals? If so, how does it operate?

Yes. Immunity is available for individuals who are the first to disclose cartel conduct to the ACCC. The criteria for eligibility is the same as for employees. To maintain conditional immunity once granted, the 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.

Have there been any notable recent cases in which a leniency application was the subject of adjudication?

Many of the cartel investigations that the Australian Competition and Consumer Commission (ACCC) conducts are initiated by an immunity application from one of the cartel participants. To remain eligible for immunity, the applicant must continue to fully cooperate during any ensuing court proceedings. Recent completed proceedings initiated by the ACCC in which there has been an immunity applicant include ACCC v Prysmian Cavi E Sistemi SRL ((2016) FCA 822 (July 20 2016)), ACCC v Yazaki Corporation ((2015) FCA 1304 (November 24 2015)) and ACCC v Colgate-Palmolive Pty Ltd ((2016) FCA 528 (May 16 2016)).

Criminal liability Is immunity from criminal prosecution available? If so, how and under what conditions is immunity granted?

The CDPP is responsible for granting criminal immunity.

Although its decision will be based on a recommendation by the ACCC, the CDPP will exercise its own discretion when considering the recommendation.

The CDPP will grant criminal immunity where it considers that the applicant meets the criteria set out in Annexure B to the Prosecution Policy of the Commonwealth, which contains the CDPP immunity policy in relation to cartel conduct. This is the same criteria that the ACCC applies in civil cases when determining whether to grant civil immunity.

Before instituting criminal proceedings against the other cartel participants, the CDPP will provide to the applicant a letter of comfort and a written undertaking, granting immunity subject to fulfilment of ongoing obligations and conditions. Once these conditions have been fulfilled by the applicant, the immunity becomes final.

Application procedure What is the procedure for a leniency application?

A corporation or individual may contact the Australian Competition and Consumer Commission (ACCC) and request a marker. This preserves, for a limited period, the applicant's 'first-in' status in seeking immunity. 

The applicant will then prepare a proffer, which outlines the evidence that it can provide to the ACCC regarding the cartel.

If the ACCC is satisfied that the applicant has met the eligibility criteria, it will be granted conditional immunity. In criminal proceedings the ACCC will recommend to the Office of the Commonwealth Director of Public Prosecutions that the applicant be granted criminal immunity. 

What is the typical timeframe for consideration of a leniency application?

The ACCC will inform an applicant if a marker is available as soon as possible after contact is made. The ACCC will generally grant an applicant around 28 days to make a proffer, although this period may be extended in certain circumstances. There is no guidance on the timeframe in which the ACCC will determine whether to grant conditional immunity based on the proffer. Once granted, the immunity will become final only after the resolution of any ensuing proceedings, which may take several years.

What information and evidence is required?

Marker

To obtain a marker, applicants must provide a description of the cartel conduct in sufficient detail to allow the ACCC to confirm that:

  • no other corporation or individual has applied for immunity or obtained a marker in respect of the cartel; and
  • it has received no written legal advice that it has reasonable grounds to institute proceedings in relation to the cartel conduct.

Proffer The proffer must disclose sufficient information to determine whether the applicant satisfies the criteria for conditional immunity. The ACCC may require an interview with one or more witnesses, or the production of certain documents to determine whether the applicant meets the conditions for immunity.

What information and evidence is disclosed to subjects of the investigation other than the leniency applicant?

The ACCC uses information provided in support of an immunity application to progress the application and take initial steps in its investigation against other cartel participants. If the ACCC commences proceedings, it will disclose to the subjects of the investigation all information and evidence that it is relying on to prove its case. Before proceedings are commenced, the ACCC need not disclose the information and evidence in its possession.

What level of cooperation is required from applicants?

Applicants 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.

What confidentiality protection is offered to applicants?

While there are confidentiality measures in place, the circumstances in which the ACCC is entitled to disclose protected information (ie, information given to the ACCC in confidence, obtained under a Section 155 notice or given in confidence by a foreign government body) are broad. Such circumstances include where:

  • the ACCC makes a disclosure in the performance of its duties or functions;
  • the ACCC is required or permitted by law to make the disclosure (eg, when ordered by a court under subpoena, except in relation to protected cartel information (see below));
  • disclosure is made to the minister, royal commission or designated government agencies to assist those agencies; and
  • disclosure is made to a foreign government body or agency to perform or exercise its functions or powers.

Additional confidentiality measures are in place where the information relates to cartel conduct and is provided in confidence (referred to as 'protected cartel information'):

  • If the ACCC is party to the proceedings, it is not required to produce protected cartel information to a court or tribunal, except with leave of a court or tribunal.
  • If the ACCC is not a party to the proceedings (eg, a follow-on damages claim), it has discretion to disclose protected cartel information.

In exercising the discretion to disclose or order disclosure of protected cartel information, the court, tribunal or ACCC will have regard to:

  • the need to avoid disruption to national and international law enforcement efforts;
  • whether information was given by an informant;
  • the protection or safety of the informant or associates;
  • the fact that disclosure of the information may discourage informants from giving information in the future; and
  • whether disclosure would be in the interests of justice or securing effective performance of the tribunal's functions.

Once proceedings are commenced, a party may apply to the court seeking a confidentiality order. The court has a wide discretion to grant confidentiality orders and these are generally granted in relation to documents that are commercially sensitive or prejudicial to the interests of certain parties.

Can the company apply for a marker? If so, under which conditions?

Yes. See above.

Law stated date Correct as of Please state the date as of which the law stated here is accurate.

July 7 2017.