ACCC Chairman Rod Sims has foreshadowed the ACCC’s priorities and a busy year with criminal cartel actions and a focus on financial services.
Criminal cartel actions
In an interview with the Australian Financial Review (AFR), ACCC Chairman Rod Sims has indicated that “2018 will be a very big turning point for cartel enforcement and cartel deterrence”. In particular, Mr Sims indicated that there are likely to be three to four domestic-based criminal cartel actions in 2018, with the possibility of seeking jail sentences for individual executives. Mr Sims did not identify the companies involved or the sectors in which they operate, but commented that they varied in size.
Sections 45AF and 45AG of the Competition and Consumer Act 2010 (Cth) lay out the corporate criminal cartel offences. Under these sections, a corporation can be fined the greater of $10,000,000, three times the total value of the benefits attributable to the offence or 10% of the company’s annual turnover for engaging in cartel conduct. Under section 79, a person involved in criminal cartel conduct can be fined $2000 penalty units or sentenced to a maximum term of 10 years imprisonment.
Last year, we reported on the ACCC’s success in its criminal cartel case against Japanese shipping company Nippon Yusen Kabushiki Kaisha (NYK), which was fined $25 million. The ACCC, in conjunction with the Commonwealth DPP, is also gearing up for a 16 week criminal cartel trial from July against Kawasaki Kisen Kaisha Ltd (K-Line), another Japanese shipping company.
Report on the banks’ interest rate decisions
Mr Sims also revealed to the AFR that the ACCC will publish a report close to the commencement of the banking royal commission, scrutinising whether or not the banks have passed on the $6.2 billion major bank levy to customers. The report will focus on the way banks make their interest rate decisions, and how market structure and levels of competition impact those decisions. Interestingly, Mr Sims said to expect “some surprises”!
This follows a specific referral to the ACCC by the Treasurer after the major bank levy was introduced in June 2017, including the establishment of the Financial Services Unit. As we reported in June last year, this unit will undertake regular in-depth inquiries into competition issues in the financial sector.
Mergers in the media sector
In light of the new media ownership laws passed in 2017, Mr Sims also anticipated a spate of media sector mergers this year.
The media ownership reforms included repeal of
- the ‘reach rule’, which prohibited a person from exercising control of television licenses that reached more than 75% of the Australian population, and
- the ‘2 out of 3 rule’, which prohibited a single entity from owning more than 2 out of 3 platforms across television, radio and newspaper in a single geographic market.
On 31 October 2017, the ACCC released updated media merger guidelines in light of these reforms.
Irrespective of these changes, Mr Sims, in a speech before the Communications and Media Law Association on 31 October 2017, emphasised that any potential merger must nevertheless still pass the substantial lessening of competition test.