Competition Law

Australian Competition Law and Policy Discussion

Posts Tagged ‘Cartels’

ACCC v Bridgestone Corporation

Posted by Julie Clarke on 21 June 2010

The full text of the Judgment of Justice Finkelstein in ACCC v Bridgestone Corporation is now available and worth a look. These are the reasons for his Honour’s order, made on 14 April 2010, accepting orders proposed by the parties following an agreed statement of facts and admissions.

In the course of his reasons for judgment, Justice Finkelstein observed that the principal object of imposing a penalty is deterrence and that, in relation to cartels, as a result of the difficulty of detection, ‘a particularly high penalty is justified’. He noted that courts will give effect to agreed penalties, provided they are within the ‘permissible range’ and set out relevant factors, noting that one of the most important factors will be the effect of the conduct in markets. He accepted that the agreed penalties of $8.235million were within the permissible range, observing that at the time of the contravention the maximum penalty in Australia was $10million.

His Honour went on to compare penalties in other jurisdictions, looking particularly at the process adopted by the European Commission for imposing cartel penalties (although he concluded that the principles adopted there and different limitation periods meant they could not be used for comparison when awarding damages in Australia).  His Honour observed, however, that ‘Australian penalties are very much on the low side’ and that they are ‘still something of a light touch notwithstanding the new penalty regime that was introduced in 2006’.  He also noted that when setting a penalty the court should not ‘lose sight of the maximum aggregate penalty that can be imposed in a particular case’, observing that there must ‘be some relationship between the maximum penalty and the penalty that is imposed’

His Honour concluded that the agreed penalties were reasonable ‘having regard to the constraints imposed upon a judge in going beyond what the parties have suggested’.

Posted in Cartels | Tagged: , , | 1 Comment »

New Zealand: New discussion paper on criminal cartels

Posted by Julie Clarke on 2 February 2010

On 27 January the NZ Minister of Commerce, Simon Power, released a discussion document on the introduction of criminal penalties for cartels.

See also article by Caron Beaton-Wells and Brent Fisse (Uni of Melbourne Legal Studies Research Paper No 413, June 2009), ‘The Australian Criminal Cartel Regime: A Model for New Zealand’.

Submissions close on 31 March 2010.

Posted in Cartels, Competition Policy, Criminal Penalties, New Zealand, Price Fixing | Tagged: , , | Leave a Comment »

New issue of CCLJ

Posted by Julie Clarke on 13 August 2009

The latest Competition and Consumer Law Journal is out (Vol 17(1)) containing some interesting items on current developments in the law, including:

  • In hope of convergence — A regional perspective on competition law (Chief Justice R S French)
  • Signalling, collusion and s 45 of the Trade Practices Act (Rhonda L Smith, Arlen Duke and David K Round)
  • The contract requirement for the joint venture exceptions under ss 44ZZRO and 44ZZRP of the Trade Practices Act (Brent Fisse)
  • Cartel damages and the passing on defence: A comparative analysis (Graeme Edgerton)

For those interested in everything TPA related, there’s also an interesting article on the scope of s 51A (representations about the future) in the context of the current review of Australian Consumer Law.

  • The 2009 review of Australian consumer law — An opportunity to reconsider and clarify the rationale and scope of s 51A of the Trade Practices Act (Aviva Freilich and Eileen Webb)

Posted in Cartels, Competition Policy, Legislation (TPA/CCA) | Tagged: , , | Leave a Comment »

Criminal Cartel Bill receives Royal Assent

Posted by Julie Clarke on 2 July 2009

The Criminal Cartel Bill received Royal Assent on 26 June 2009 – it is now an Act (Act no 59 of 2009) and the cartel provisions will enter force after 28 days (24 July).

The ACCC has also released a Revised Immunity Policy for Cartel Conduct and associated interpretation guidelines. They will come into operation when the new cartel provisions come into force on 24 July. In addition to setting out the process for obtaining immunity for civil cartel conduct the new policy sets out the procedures for obtaining immunity in relation to criminal cartel offences, including the role of the Commonwealth Director of Public Prosecutions (CDPP) (see, in particular, Annexure B of the Prosecution Policy of the Commonwealth).

Posted in Cartels, Criminal Penalties, Guidelines, Immunity, Price Fixing | Tagged: , , , | Leave a Comment »

Criminal cartel bill passes … now awaiting assent

Posted by Julie Clarke on 17 June 2009

The Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2008 passed the Senate on 15 June 2009 with minor amendments that were confirmed by the House yesterday.  The bill is now awaiting assent and the core elements of the bill will come into operation 28 days after receiving assent.

The bill creates a new ‘cartel offence’ for which it provides criminal penalties of up to 10 years’ imprisonment and fines of up to $220,000.  A cartel offence occurs whenever a party makes or gives effect to a contract, arrangement or understanding containing a cartel provision, provided they intended to enter into that contract, arrangement or understanding and had knowledge or belief that it contained a cartel provision (the criminal ‘fault’ element).  In addition to introducing criminal penalties for cartel conduct the bill also introduces a civil prohibition, which mirrors the criminal cartel prohibition, save that it omits the criminal ‘fault’ element.  The penalty for contravening the civil prohibition is the same as the existing civil penalties.

The bill defines a cartel provision (in s 44ZZRD!) as a provision in a contract, arrangement or understanding between competitors relating to

  • Price fixing (where the provision has the purpose or effect (or likely effect) of directly or indirectly fixing, controlling or maintaining prices for goods or services supplied or acquired (or re-supplied or likely to be re-supplied)
  • Restricting outputs in the production or supply chain (where the provision has the purpose of directly or indirectly preventing, restricting or limiting production of goods, the capacity to supply services, or the supply of goods or services)
  • Allocating customers, suppliers or territories (between all or any of the parties) or
  • Bid rigging.

The existing price-fixing prohibition, contained in the more user-friendly s 45A, will be repealed.  The bill leaves in place existing exclusionary conduct provisions but does provide some anti-overlap provisions for resale price maintenance, exclusive dealing, dual listed company arrangements and mergers (these are a welcome addition to October 2008 exposure draft).

The new offence also contains a limited exception for joint ventures.  This exception has been the subject of considerable debate, centred on the fact that the exception is narrower than the current civil joint venture exception.  In particular, it is limited to contractual joint ventures (no adequate explanation has been provided for this restriction).  Amendments to the bill, passed by the House yesterday, extend the exception to joint ventures in which the parties intended to enter into a contract and ‘reasonably believed’ they had entered into a contract.  However, it does not extend the exception to arrangements or understandings and the supplementary Explanatory Memorandum, designed to explain this amendment, is unhelpful and, potentially, misleading in its explanation of the scope of this amendment.

The criminalisation of cartels is desirable.  The economic damage they cause is well documented and civil penalties, no matter the size, have failed to provide adequate deterrence.  But the consequences of criminalisation are serious and it is important to ‘get it right’.  The statement in the Senate ‘debate’ (if one can call it that) that we ‘would not want to see this legislation delayed’, despite (in Senator Cooney’s own words) its potential to generate uncertainty, the fact that the ‘legislation might be somewhat woolly’ and ‘misgivings’ about some of the provisions in the legislation, is unwise.  The legislation is long (running to 90 pages) and complex and, regardless of the desirability for criminal penalties, it would be wise to wait a bit longer and permit a full and transparent public consultation and review process before passing such far-reaching – and, in its current state, deficient – legislation.  Unfortunately the government has neglected this option.  Genuine concerns have been ignored, or dismissed, without adequate explanation.  Unfortunately the scope and complexity of the proposed new law will give rise to uncertainty for some time as the regulators, DPP and business feel their way through these new laws.

This legislation has its origins in recommendations by the Dawson Review into Competition Law which reported in 2003.  This led to the establishment of a criminal penalties working party which reported to the Government in 2004; this report was never released publicly and a recent attempt to obtain it through a FOI claim was unsuccessful.  Following this report the Howard Government announced, in February 2005, that it planned to introduce criminal penalties for serious cartel conduct as recommended by the Dawson Committee later that year.  A federal election interfered with those plans and no bill was introduced.

Following the election of the Rudd Government, an Exposure Draft Bill for implementing criminal penalties was released in early 2008 along with a Discussion Paper on Criminal Penalties for Serious Cartel Conduct.  The bill was heavily criticised, but no detailed response to the submissions on the Discussion Paper was ever released.   An amended Exposure Draft Bill was released on 17 October 2008 containing some important changes, including removal of the ‘dishonesty’ element, designed to distinguish serious from ‘non-serious’ cartel conduct, and (somewhat inexplicably) increasing the criminal penalty from 5 years imprisonment to 10 years.  A further amended version was introduced into Parliament on 3 December 2008.

The bill was sent to the Senate Economics Committee on 4 December and, in the meantime, was passed by the House on 11 February and introduced into the Senate the next Day.  The Senate Economics Committee’s report was released on 26 February and must go down as one of the worst (if not the worst) reports ever produced by that Committee – it was littered with errors and did not attempt to address issues of key concern.   The report, despite recognising certain deficiencies with the bill, recommended that it be passed in current form.  Continuing criticism over the limitations on the new joint venture exemptions (inexplicably narrower than existing exemptions form the civil prohibitions) did, however, result in a relatively minor joint venture amendment in the Senate (as noted above) and the bill, with these amendments, was passed by the Senate on 15 June.  In passing the bill the Senate engaged in no substantive debate; instead the Hansard is littered predominantly with self-congratulatory remarks over the introduction of criminal penalties. Those amendments were agreed to by the House on 16 June.  The bill now awaits Royal Assent.

Posted in Cartels, Criminal Penalties, Legislation | Tagged: , , | Leave a Comment »

Competition Law Conference

Posted by Julie Clarke on 1 June 2009

The 20th Annual Competition Law Conference, organised by Chris Hodgekiss of the NSW Bar, was held in Sydney last Saturday 23 May, covering a range of current issues in competition law and policy.

The keynote speech of the Conference, ‘In Hope of Convergence – A Regional Perspective on Competition Law‘, delivered by High Court Chief Justice RS French has now been published online on the High Court’s website.  Chief Justice French paid particular attention to the new Indian competition laws, the majority of which came into operation on 20 May 2009.

Other sesssions at the Conference covered the proposed conduct of cartel litigation following the introduction of criminal penalties (including ‘the ACCC enforcement perspective on serious cartels – some key issues and practical considerations‘ by Marcus Bezzi (Executive General Manager, Enforcement & Compliance Division, ACCC) and ‘The Role of the CDPP in the Prosecution of the Proposed Cartel Offence’ Graeme Davidson (Deputy Director, CDPP). Brent Fisse (Lawyer & Senior Fellow, Melbourne Law School) followed with the paper ‘Avoidance and Denial of Liability‘, assessing potential escape routes from the new cartel laws), the complexities of representative and class action proceedings in competition law (with Dr Peter Cashman and Ben Slade) and Mergers and the availability (or otherwise) of a ‘failing firm’ defence (courtesy of Dave Poddar (Partner, Mallesons) and Tim Grimwade (ACCC))

Posted in Cartels, Conferences, Criminal Penalties, Evidentiary Issues, Guidelines, Mergers, Price Fixing | Tagged: , , , , , , | 1 Comment »

China Defends Vitamin Price Fixing

Posted by Julie Clarke on 26 November 2008

The Wall Street Journal reports that the Chinese Ministry of Commerce has made a ‘friend-of-the-court’ filing in a case alleging price fixing by four Chinese vitamin C manufacturers.  The four companies involved are said to have captured the relevant market after eliminating rivals over a number of years through predatory pricing conduct.  It is alleged that they then agreed to control export quantities and raise prices.  China is defending the manufacturers, claiming ‘sovereign immunity’; for purposes of their motion to dismiss the Chinese manufacturers did not dispute the price-fixing allegations – they simply claimed that they were compelled to engage in that conduct by the Ministry.


On 6 November Judge Trager, in the United States District Court for the Eastern District of New York (In Re Vitamin C Antitrust Litigation 06-mdl-1738 (DGT)), rejected a claim by by the Chinese companies to dismiss the case “on the grounds that their price fixing activities were compelled by the Chinese government.” Judge Trager noted that “The Chinese government’s appearance as amicus curiae is unprecedented’.  Judge Trager held that while the Ministry’s Brief was ‘entitled to substantial deference’ it would ‘not be taken as conclusive evidence of compulsion, particularly where, as here, the plain language of the documentary evidence submitted by the plaintiffs directly contradicts the Ministry’s position.’

Judge Trager noted that ‘the issue at this stage of the case is whether there is a factual dispute as to the alleged compulsion’ and concluded that ‘the record as it stands is simply too ambiguous to foreclose further inquiry into the voluntariness of the defendants’ actions’ and, accordingly, denied the defendants’ motion to dismiss.

The outcome of this decision will have significant implications for international competition law enforcement.

See also Kate Fazzini, ‘Antitrust Suit Proceeds Against Chinese Vitamin C Makers‘, NYLJ, 13 November 2008.

Posted in Cartels, Misuse of Market Power, Price Fixing | Tagged: , , | Leave a Comment »

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