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Under the Competition and Consumer Act 2010 (Cth) (“CCA”) there are parallel criminal offences and civil prohibitions relating to cartel conduct.
Cartel conduct is where a corporation or individual makes or gives effect to a contract, arrangement or understanding that contains a cartel provision.
A cartel provision is defined by the CCA as a provision relating to:
- restricting outputs in the production and supply chain;
- allocating customers, suppliers, or territories; or
by parties that are, or would otherwise be, in competition with each other.
Penalties for those involved in a cartel include:
- Maximum of 10 years imprisonment and/or fines of up to $340,000 per criminal cartel offence.
- A pecuniary penalty of up to $500,000 per civil contravention.
The maximum fine or pecuniary penalty for each criminal cartel offence or civil contravention is the greater of:
- 3 times the total value of the benefits obtained by one or more persons and that are reasonably attributable to the offence or contravention; or
- Where benefits cannot be fully determined, 10 per cent of the annual turnover of the company (including related corporate bodies) in the preceding 12 months.
Other penalties for cartel civil contraventions or criminal offences include:
- Orders disqualifying a person from managing corporations; and/or
- Community service orders.
Cartel offences or contraventions are very serious. It is likely that when the CDPP starts commencing prosecutions and there are convictions, the Courts will start imposing penalties of imprisonment and significant fines on individuals.
In an effort to promote whistle blowing and cooperation, the ACCC has an immunity policy, which applies to both civil and criminal actions. However, with respect to criminal immunity, the CDPP will have the final say, but will consider the recommendation put forward by the ACCC.
Where a person or company applies for immunity, they must fulfil a number of conditions before being considered. These include that the applicant:
- must be ‘first in’;
- must not have been a leader of the cartel or have coerced others to partake in the cartel;
- can offer information or evidence where the ACCC does not already have enough evidence to prosecute; and
- must provide full disclosure of its conduct and cooperate fully throughout the investigation.
However, there is always the risk that immunity is not provided. Although, when immunity is not provided, not all is lost. Cooperation can be used in mitigation at sentence, or judgement, as the case may be with civil actions. The level of mitigation depends on the value and importance of the evidence provided and the level of cooperation. This is in addition to whether the person took prompt action to retreat from their involvement in the cartel.
Another important consideration is that even when immunity is provided, this does not limit action instituted by a private litigant who has suffered loss and damage as a result of the cartel. A plaintiff in this action can seek to recover its loss and damage and seek declarative and injunctive relief.
If you or your company are concerned about potential involvement in cartel conduct it is important that you seek legal advice immediately. There are a number of considerations that need to be observed. The consequences for a company or an individual can be devastating and have long term effects. An understanding of the laws, dealing with regulators and management of the various legal actions is a must.
At Quinn & Scattini we have the expertise and team that can manage large and complex matters.