Last week, the Federal Government passed the Trade Practices Amendment (Cartel Conduct and Other Measures) Act 2009 (Cth) (Amendment), which amends the Trade Practices Act 1974 (Cth) (TPA) to criminalise serious cartel conduct.
The legislation brings Australia into line with 15 OECD member countries that already have criminal sanctions for cartel conduct, including the United States, Canada and the United Kingdom.
The changes also introduce a maximum penalty of a ten-year jail term for criminal cartel conduct.
The introduction of criminal sanctions for cartel conduct demonstrates the increasing government and regulatory activity in the competition law area. Given the serious nature of the potential criminal sanctions, businesses should take appropriate TPA risk management and compliance steps, such as implementing TPA compliance programs.
Cartel conduct
The new definition of 'cartel provision' will substantially broaden the application of the existing provisions of the TPA dealing with cartel conduct.
The 'cartel provision' definition encompasses conduct between competitors with:
- the purpose or effect of directly or indirectly fixing prices for goods and services;
- or the purpose of directly or indirectly limiting supply, sharing or allocating a customer base or rigging a tender process.
The criminal offences
As a result of the Amendment, a corporation or person will commit a criminal offence if the corporation or person:
- makes, or gives effect to, an agreement or arrangement, or arrives at an understanding which contains a cartel provision; and
- with knowledge or the belief that the agreement, arrangement or understanding contains the cartel provision.
The Director of Public Prosecutions (DPP) will have to prove these offences beyond reasonable doubt.
Parallel civil offences
If the DPP is not confident of obtaining a criminal conviction, the ACCC may prosecute the corporation or person for parallel civil offences. These provisions also enable actions for damages by private parties.
A corporation or person will commit a civil offence merely by making, or giving effect to, a contract or arrangement, or arrives at an understanding which contains a cartel provision.
There need not be any knowledge or belief on the part of the defendant that the agreement contains a cartel provision, and the ACCC will not need to prove the offence beyond reasonable doubt, but merely on the balance of probabilities.
Penalties
A criminal offence committed by a person may be punishable by a term of imprisonment not exceeding 10 years or a fine not exceeding $220,000.
A criminal offence committed by a corporation may be punishable on conviction by a fine not exceeding the greater of the following:
- $10,000,000;
- three times the total value of the benefit obtained from the infringing conduct; or
- if the court can not determine the total value of those benefits, 10% of the corporation's annual turnover.
The financial penalties for a breach of the criminal cartel provisions are similar to the financial penalties for a breach of the civil cartel provisions referred to above.
Additional provisions
In addition to the new offences, the Amendment introduces a number of supporting provisions including:
- exceptions for:
- arrangements between related bodies corporate and for new joint ventures; and
- arrangements notified to, or authorised by, the ACCC;
- immunity provisions aimed at protecting whistleblowers; and
- enhanced information gathering powers for the ACCC including telephone interception powers.
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