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Cartel Conduct Criminalised!
Posted: 25/06/2009
New legislation has recently been enacted which imposes criminal sanctions (including potential prison sentences), against those involved in cartel conduct.
The Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2008 (Cth) was passed by the Senate on 15 June 2009.
Individuals and corporations that make or give effect to a contract, arrangement or understanding that contains a provision whose purpose is to fix prices, restrict production, divide or share markets or manipulate bids (“a cartel provision”), may now be found guilty of serious cartel conduct. The maximum penalty is 10 years imprisonment and/or a fine of up to $220,000.00 for an individual and$10 million for a corporation, or 3 times the gain from the cartel conduct or 10% of the total turnover of the corporation.
To be found guilty of the criminal offence it is sufficient that the individual or corporation is knowingly made or gave effect to the cartel provision. An intention to dishonestly obtain a benefit is not required to be proved. The criminal offence requires proof beyond reasonable doubt.
In order for civil proceedings for serious cartel conduct to be taken against an individual or corporation, the prosecuting party will need to demonstrate knowledge on the part of that individual or corporation. It is sufficient that the individual or corporation makes or gives effect to a contract, arrangement or understanding that contains a cartel provision. The standard of proof for the civil offence is the balance of probabilities.
The TPA gives no guidance as to whether cartel conduct will be pursued civilly or criminally in a given case - this decision is left to the discretion of the ACCC. The ACCC is yet to give any meaningful guidance regarding how (or when) it will make this decision.
The new cartel amendments will come into effect 28 days after they receive Royal Assent.
In order to prepare for the criminalisation of cartel conduct, all corporations should:
1. Document any verbal joint venture agreements between you and companies that are otherwise your competitors.
2. Review all contracts (or verbal arrangements) involving companies that are otherwise your competitors that:
-restrict how you conduct your business (eg the prices you charge, the products you acquire or sell, the people from whom you acquire or to whom you sell, or the areas in which you operate)
- restrict how another company conducts its business.
3. Update your trade practices compliance program and policies, to ensure they cover the new cartel laws.
4. Ensure your staff are aware of their obligations under the TPA, particularly given that cartel conduct will now attract criminal sanctions.
If you require assistance in preparing for the new laws, please contact us.
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