It is an offence under Part IV of the Competition and Consumer Act 2010 (Cth) to:
- make a contract or arrangement, or arrive at an understanding, containing a “cartel provision”; or
- give effect to that “cartel provision”.
A “cartel provision” can be summarised as provision, between parties likely to be in competition with each other, which has the purpose of, or likely effect of:
- fixing, controlling or maintaining the price of any goods or services supplied
- restricting or limiting production or supply by one or more parties
- markets sharing
- bid rigging.
In recent years, the ACCC has focussed on identifying, punishing and preventing cartel conduct, due to the detrimental effect of such conduct on competition.
In June 2006, competition regulators around the world simultaneously raided the offices of airlines in the United States and Europe for the purpose of investigating claims by Lufthansa that many major airlines had colluded in the setting of their fuel and security surcharges. The cartel originated in 1996.
In the United States, Qantas freight division was targeted for allegations of price-fixing between 2000 and 2006. In 2007, Qantas agreed to plead guilty and incurred US$61 million in fines to be paid to the US Department of Justice. The former head of the freight division spent 6 months in US prison after also pleading guilty to charges relating to the price-fixing cartel.
In Australia in 2008, the ACCC pursued Qantas alleging various breaches of the cartel provisions in its air cargo/ freight division. Qantas received a fine of $20 million.
The ACCC has also pursued 15 local, European and Asian based airlines for price-fixing in the Australian air cargo market.
As at December 2012, almost $100m in fines have been issued to 13 airlines, the most recent being a $7.5million fine issued to Thai Airways.
Click here to view some of the more notable fines.
In the Federal Court decisions against Emirates and Singapore Airlines, the ACCC was also awarded the amount of $500,000 in costs in each case.
Speaking in relation to the recent judgment of the Federal Court against Thai Airways, the Chairman of the ACCC, Rod Sims, said that the judgement was a “strong signal to the business community that cartel conduct will not be tolerated”.
The ACCC has also instituted proceedings which are currently before the Federal Court against Air New Zealand, Cathay Pacific and Garuda Indonesia.