Cooperating parties

Immunity

Is there an immunity programme? If so, what are the basic elements of the programme? What is the importance of being ‘first in’ to cooperate?

The Australian Competition and Consumer Commission (ACCC) Immunity and Cooperation Policy sets out the ACCC’s policies in relation to applications for both civil and criminal immunity from ACCC-initiated civil proceedings and criminal prosecution. While the ACCC is only responsible for granting civil immunity (criminal immunity is a matter for the Commonwealth Director of Public Prosecutions (CDPP)), the ACCC is the sole point of contact for applicants seeking civil or criminal immunity. Annexure B to the Prosecution Policy of the Commonwealth sets out the CDPP’s policy when considering an application for immunity from criminal prosecution for serious cartel offences.

 

Civil immunity

The criteria for conditional civil immunity are:

  • the applicant admits it is engaging in, or has engaged in, cartel conduct;
  • the applicant is the first party to apply for immunity in respect of the cartel;
  • the applicant has not coerced others to participate in the cartel;
  • the applicant has either ceased its involvement in the cartel or undertakes to the ACCC that it will cease its involvement in the cartel;
  • the applicant’s admissions are a truly corporate act (corporations only);
  • the applicant has provided full, frank and truthful disclosure, and has cooperated fully and expeditiously while making the application, including taking all reasonable steps to procure the assistance and cooperation of witnesses and to provide sufficient evidence to substantiate its admissions, and agrees to continue to do so on a proactive basis throughout the ACCC’s investigation and any ensuing court proceedings;
  • the applicant has entered into a cooperation agreement; and
  • the applicant has maintained, and agrees to continue to maintain, confidentiality regarding its status as an immunity applicant, details of the investigation and any ensuing civil or criminal proceedings unless otherwise required by law or with the written consent of the ACCC.

 

Generally, the ACCC will not grant conditional immunity if, at the time an application is received, the ACCC is already in possession of evidence that is likely to establish at least one contravention of the Competition and Consumer Act 2010 (Cth) (CCA) (whether civil or criminal), arising from the cartel conduct.

Conditional civil immunity will become final immunity after the resolution of any ensuing proceedings against the remaining cartel participants.

 

Criminal immunity

Where the ACCC considers that the applicant satisfies the conditions for civil immunity, it will make a recommendation to the CDPP that immunity from criminal prosecution also be granted to the applicant. The CDPP will exercise its own discretion when considering the recommendation.

Where the CDPP is satisfied that the applicant meets the criteria for criminal immunity (which are the same as the conditions for civil immunity), it will initially provide a letter of comfort to the applicant. This is generally provided at the same time as the ACCC grants conditional civil immunity. Prior to instituting a criminal prosecution against any member of the cartel who does not have immunity, the CDPP will then determine whether to grant the applicant a written undertaking that grants conditional immunity subject to the applicant providing ongoing cooperation through the criminal proceedings. Once these conditions are fulfilled by the immunity applicant, the immunity becomes final.

Subsequent cooperating parties

Is there a formal programme providing partial leniency for parties that cooperate after an immunity application has been made? If so, what are the basic elements of the programme? If not, to what extent can subsequent cooperating parties expect to receive favourable treatment?

Parties who are not eligible for ‘first-in’ immunity can nonetheless cooperate with the ACCC in relation to its investigations. The ACCC’s policy on cooperation is also set out in the ACCC Immunity and Cooperation Policy. While cooperation does not provide immunity from prosecution, it will typically result in more lenient treatment by the court (such as lower penalties). Unlike some jurisdictions, there are no pre-established discount levels.

Where the ACCC brings civil proceedings against parties to the cartel, the ACCC may require the cooperating party to make admissions, agree to a statement of facts or give evidence against the remaining cartel participants. Although the ACCC and the cooperating party may propose an agreed penalty to the court, and the ACCC will make submissions to the court regarding the party’s cooperation, the court must ultimately determine whether the penalty is appropriate in all the circumstances.

If a party cooperates with the ACCC during a criminal investigation and the CDPP brings criminal proceedings, the CDPP may require the cooperating party to make admissions, agree a statement of facts or give evidence against the remaining cartel participants. The CDPP will then make submissions to the sentencing court about the party’s cooperation. In sentencing the defendant, the court is required to take into account cooperation, any early guilty plea and the extent to which the defendant has demonstrated contrition for the offence. Ultimately, it will be for the court to determine the appropriate penalty or sentence, although the ACCC, the CDPP and the cooperating party can provide the court with a penalty range.

Going in second

How is the second cooperating party treated? Is there an ‘immunity plus’ or ‘amnesty plus’ treatment available? If so, how does it operate?

Civil and criminal immunity are only available to the first eligible party to disclose the conduct to the ACCC. However, if a party is not the first party to approach the ACCC, or does not meet the immunity criteria outlined above, that party may instead cooperate with the ACCC.

In addition, a party that is cooperating with the ACCC in relation to one cartel may apply for immunity in relation to a second unrelated cartel and seek ‘amnesty plus’ for the original cartel conduct. Amnesty plus is a recommendation by the ACCC to the court for a further reduction in the civil penalty in relation to the first cartel. In criminal proceedings, the CDPP will advise the court of the full extent of the party’s cooperation in relation to both cartels so that the cooperation is taken into account for sentencing purposes.

A party is eligible for amnesty plus if it:

  • is cooperating with the ACCC in respect of the first cartel investigation; and
  • it receives conditional immunity for the second cartel.
Approaching the authorities

Are there deadlines for initiating or completing an application for immunity or partial leniency? Are markers available and what are the time limits and conditions applicable to them?

The first step in an immunity application is to request a ‘marker’ from the ACCC. The marker preserves, for a limited period, the applicant’s status as the first party to seek immunity. The ACCC then allows the applicant a limited time in which to investigate the conduct and seek conditional immunity if necessary. The time limit of the marker will be specified by the ACCC at the time the marker is granted and will vary depending on the circumstances.

The applicant will then prepare a ‘proffer’, which provides specific detail as to the type of evidence that can be provided to the ACCC to establish the existence of the cartel. If the ACCC is satisfied on the basis of the proffer that the applicant has met the eligibility criteria for conditional immunity, the application will be granted. Conditional immunity will become final immunity at the conclusion of any ensuing proceedings provided the applicant does not breach any conditions of immunity and maintains eligibility under the immunity policy.

Cooperation

What is the nature, level and timing of cooperation that is required or expected from an immunity applicant? Is there any difference in the requirements or expectations for subsequent cooperating parties that are seeking partial leniency?

To be eligible for criminal or civil immunity, the applicant must cooperate and provide full, frank and truthful disclosure in making the application and in any subsequent investigation or court proceedings. An immunity application should be made as soon as possible but can be made after the ACCC has commenced an investigation. An application for criminal immunity is made to the ACCC at the same time as the application for civil immunity and the ACCC is responsible for both the civil and criminal investigations.

If a party does not apply for immunity (or does not meet the criteria), the party may instead cooperate with the ACCC. It is a condition of the ACCC’s policy that cooperation be offered in a timely manner and that the party offers full, frank and truthful disclosure and cooperates on a continuing basis through the investigation and any proceedings. In criminal proceedings, cooperation and the timeliness of a guilty plea are taken into account by the court in sentencing the defendant.

Confidentiality

What confidentiality protection is afforded to the immunity applicant? Is the same level of confidentiality protection applicable to subsequent cooperating parties? What information will become public during the proceedings and when?

The ACCC will use its best endeavours to protect confidential information provided to it as part of an immunity application, including the immunity applicant’s details. The ACCC generally has a policy that it will accept confidential information from cooperating parties as well. However, once the ACCC commences proceedings, it will generally disclose to the other cartel participants all information and evidence that it is relying on to prove its case, which will include information and documents provided by the immunity applicant. Depending on the nature of this information, it is sometimes provided to external counsel subject to undertakings. Once proceedings are commenced, a party may also apply to the court seeking a confidentiality order. The court has broad discretion to grant confidentiality orders and these are generally granted in relation to documents that are commercially sensitive or prejudicial to the interests of the party, or both.

In addition, section 155AAA of the CCA grants the ACCC broad discretion to disclose protected information in other circumstances, including:

  • by the ACCC in the performance of its duties or functions;
  • where the ACCC is required or permitted by law to make the disclosure (this includes where ordered by a court to disclose the information under subpoena, except in relation to ‘protected cartel information’);
  • to the minister, royal commission or designated government agencies; and
  • where disclosure is made to a foreign government agency to perform its functions.

 

In practice, the ACCC has been reluctant to release confidential information, as it has been concerned that this could interfere with its immunity process. It will generally not disclose to an overseas regulator protected information received from an immunity applicant without the applicant’s consent but this does not prevent the ACCC from having discussions about conduct that does not involve the disclosure of the confidential information.

Additional measures are in place where the protected information relates to cartel conduct and is provided in confidence (protected cartel information). First, if the ACCC is a party to proceedings, the ACCC is not required to produce protected cartel information to a court or tribunal except with leave of a court or tribunal. Second, if the ACCC is not a party to the proceedings (eg, a follow-on damages claim), the ACCC has discretion to disclose protected cartel information. In exercising their discretion to disclose or order disclosure of protected cartel information, the court, tribunal or ACCC will have regard to:

  • the fact that the information was given to the ACCC in confidence and by an informant;
  • Australia’s relations with other countries;
  • the need to avoid disruption to national and international law enforcement efforts; and
  • whether disclosure would be in the interests of justice or securing effective performance of the tribunal’s or court’s functions.

 

Despite this, it is important to be aware that documents and information provided to the ACCC have the potential to be disclosed to third parties.

Settlements

Does the investigating or prosecuting authority have the ability to enter into a plea bargain, settlement, deferred prosecution agreement (or non-prosecution agreement) or other binding resolution with a party to resolve liability and penalty for alleged cartel activity? What, if any, judicial or other oversight applies to such settlements?

Civil offences

The ACCC does not have the power to impose a penalty itself. If the respondent admits to cartel conduct, the ACCC must still bring proceedings for a penalty to be imposed. Reaching a settlement with the ACCC in these circumstances generally involves the ACCC and the respondent agreeing on a statement of facts and the scope of the respondent’s admissions. The ACCC and the respondent may also potentially agree on a penalty and make joint submissions to the court as to why that penalty is appropriate. The court will make declarations that cartel conduct occurred if it is satisfied that the agreed facts and admissions amount to cartel conduct under the CCA. The court will order the penalty proposed by the parties if satisfied that it is appropriate in all the circumstances.

 

Criminal offences

In criminal cases, the defendant can admit to cartel conduct and, together with the CDPP, file an agreed statement of facts and admissions with the court. However, unlike in civil cases, it is not appropriate that the defendant, ACCC and CDPP propose a fine to the court. The defendant is permitted to make submissions to the court as to the appropriate penalty range and the prosecution can respond to the range proposed and indicate whether in the prosecution's submission it would be open to the court to impose a sentence within that range, or whether imposing a sentence within that range might lead to appellable error. However, the appropriate penalty is a matter for the court in its discretion. The court will take into account a range of factors in sentencing, including:

  • the degree to which the person has shown contrition;
  • whether the person has entered an early guilty plea; and
  • the degree to which the person has cooperated.

 

Deferred prosecution agreements are not used in Australia, at least in a cartel context. While there is currently a bill before the Federal Parliament to establish a deferred prosecution agreement regime in Australia in relation to a specific set of serious corporate criminal offences, it is not intended to apply to cartel offences. In August 2020, the Australian Law Reform Commission provided feedback on this proposal as part of its report into Australia's corporate criminal responsibility regime and recommended some revisions.

Corporate defendant and employees

When immunity or partial leniency is granted to a corporate defendant, how will its current and former employees be treated?

When a corporation seeks immunity, it may apply for derivative immunity for related companies or current and former directors, officers and employees of the corporation who were involved in the conduct.

Dealing with the enforcement agency

What are the practical steps for an immunity applicant or subsequent cooperating party in dealing with the enforcement agency?

To satisfy the criteria for both conditional civil and criminal immunity, the immunity applicant would need to:

  • admit that it is engaging in, or has engaged in, cartel conduct;
  • be the first party to apply for immunity in respect of the cartel;
  • demonstrate that it has not coerced others to participate in the cartel;
  • demonstrate that it has either ceased its involvement in the cartel or undertake to the ACCC that it will cease its involvement in the cartel;
  • demonstrate that its admissions are a truly corporate act (corporations only);
  • provide full, frank and truthful disclosure, and cooperate fully and expeditiously while making the application, including taking all reasonable steps to procure the assistance and cooperation of witnesses and provide sufficient evidence to substantiate its admissions, and agree to continue to do so on a proactive basis throughout the ACCC’s investigation and any ensuing court proceedings;
  • enter into a cooperation agreement; and
  • maintain, and agree to continue to maintain, confidentiality regarding its status as an immunity applicant, details of the investigation and any ensuing civil or criminal proceedings unless otherwise required by law or with the written consent of the ACCC.

 

Parties who are not eligible for ‘first-in’ immunity can nonetheless cooperate with the ACCC in relation to its investigations. Where the ACCC brings civil proceedings or the CDPP brings criminal proceedings against the participants in a cartel, the cooperating party may be required by the ACCC or the CDPP to make admissions, agree to a statement of facts or give evidence against the remaining cartel participants.