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We're joined once again by Brett Bolton, who is a Special Counsel in the Litigation Dispute Resolution Team at HopgoodGanim, Brett thanks for joining us.
Now Brett last year the ACCC reviewed its immunity policy for cartel conduct, and last month it's released a draft policy update, given that uncovering cartel conduct is difficult especially without whistle blowers, do you think the changes I guess provide better enticement for participants to come forward?
In a word yes they do Kate. I suppose that it's important to realise that this new proposed policy doesn't really represent all that much of a shift in policy or approach but what the ACCC's succeeded I think in doing is they're making their new procedures and policies clearer and more transparent, it's very much a user friendly approach because the ACCC, as you said, relies heavily on self-reporting by people who are applying for immunity if they're going to investigate or be able to investigate cartel conduct, like somebody once said it's a can of worms that only opens from the inside.
And Brett just briefly when we talk about cartel conduct what are some of the examples of the type of conduct that it includes?
Well cartel conduct comes down to types of behaviour which are described as obviously price fixing, price fixing is your classic cartel behaviour if you like, that's where two or more competitors get together and agree on the prices that they're going to offer for their goods or services to their customers or the prices that they're going to ask their suppliers for. Another element of cartel behaviour is bid rigging, bid rigging was something that was fairly rife in the construction industry, it involves a situation where a bunch of competitors in the building industry get together and decide on which projects they're going to tender for and they sometimes have even agreed on the prices that they'll quote in the tenders that they submit to make sure that one of the tenderers is successful and the other ones fail. So they're the two main areas where cartel behaviour manifests itself in the economy.
Have we seen or can you mention any high profile examples over the years?
Yeah probably the most notorious example if I can put it like that was the case involving Visy Board or Visy Paper and Amcor, about five or six years ago, essentially Visy and Amcor they had the great majority of the what was called the corrugated fibre packaging market which you and I would call the humble cardboard carton, what they basically did was they nominated executives who got together and co-ordinated price rises and they also colluded when they were negotiating quotes for customers, they met regularly and secretly in public places and you know like hotels and parks and communicated using public phones and special pre-paid mobile phones, it was a little bit like an episode of the Wire the way these guys acted, but it all came unstuck when somebody blew the whistle and the companies involved, particularly Visy, was heavily fined and some of the individuals were also heavily fined. The ACCC has had some good success recently with the airlines, it's pursued 15 local and international airlines for price fixing in the Australian air cargo market, and its scalps include Qantas, British Airways, Japan Airlines, Korean Airlines, some of the fines have gone into the millions of dollars, so they're probably some of the more high profile examples that readily spring to mind.
Well just on the fines and the fact that they can be applied to companies and individuals, what are the penalties that cartel participants can face if they're caught?
Yeah since 2009 we've had cartel provisions which carry criminal penalties as well as civil penalties and so the criminal cartel provisions say that if an individual is convicted of a criminal cartel offence that individual can be jailed for up to 10 years and fined up to $220,000 for each offence or charge, the maximum fines that a company can get well the court's given an option of choice of three, it can be the greater of either a fixed fine of $10 million or three times the benefit that the company has obtained from the behaviour if the court's able to work that out or the third option is that the court can just say well we'll fine you 10% of the annual sales turnover for the whole group of companies of which you're a part. So with significantly sized organisations that can run into some substantial sums of money.
Yes some seriously big consequences there.
Brett thanks so much for joining us.
That was Brett Bolton, who is a Special Counsel in the Litigation and Dispute Resolution Team at HopgoodGanim. Now listeners if you have a question for Brett you can send them through either using the panel on your screen or otherwise via email to email@example.com.