| The Rudd Government has fulfilled an election commitment with the passing of the Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2008.
This Bill amends the Trade Practices Act 1974 to introduce criminal and civil sanctions specifically targeting serious cartel conduct.
Individuals and companies that fix prices or reduce choice by distorting the ordinary flow of competition now face some of the stiffest penalties in the world for this type of behaviour.
The Government has introduced a maximum jail term of 10 years for individuals Anyone engaging in serious cartel conduct also faces fines of up to $220,000 for individuals and $10 million for corporations under the tough new legislation.
The Federal Government's Bill will also enable telephone interception powers to be used as an investigatory tool in relation to the criminal offences.
Elements of the Criminal Offences
The Bill makes it an offence for a corporation to make or give effect to a contract, arrangement or understanding between competitors that contains a provision to fix prices, restrict outputs, divide or share markets, or rig bids.
The Government has decided that the offences should no longer include the words ‘with the intention of dishonestly obtaining a benefit’, and instead apply fault elements under the Criminal Code (intention, and knowledge or belief) to the offences.
This will ensure that the burden of proof is high enough to catch only really serious offenders but also ensures the fault element is not used as an escape clause in the law.
Criminal Penalties
The maximum penalties for the offences are:
• for an individual – a maximum term of imprisonment of 10 years and/or a maximum fine of
$220,000; and
• for a corporation – a fine that is the greater of $10 million or three times the value of the benefit from the cartel, or where the value cannot be determined, 10 per cent of annual turnover.
The penalty for individuals brings Australia into line with penalties in the United States.
Parallel Civil Prohibitions
With the removal of the dishonesty element from the criminal offences, the Government will introduce a parallel scheme of civil prohibitions on serious cartel conduct that contain the same elements as the new criminal offences.
The differentiating factors are that the criminal offences require proof of the elements of the offence beyond reasonable doubt, and that certain ‘fault’ elements are automatically applied under the Commonwealth Criminal Code.
As parallel criminal and civil prohibitions could give rise to double jeopardy concerns, the Government will also enable civil proceedings to be postponed until criminal proceedings are completed. If the defendant is convicted, the civil proceedings would be terminated.
Cartel Provisions
The Government has changed the tests that apply in determining whether a provision of a contract, arrangement or understanding qualifies as a cartel provision and is prohibited.
For a breach comprising price fixing, the test now provides that the provision must have had the purpose, effect or likely effect, of directly or indirectly fixing prices.
For a breach comprising other forms of serious cartel conduct (output restrictions, market sharing and bid rigging), the test now provides that the provision must have had the purpose of directly or indirectly restricting outputs, sharing markets or rigging bids.
These amendments bring the tests in line with tests that apply under the existing civil prohibitions in the Trade Practices Act 1974 upon which the new cartel prohibitions have been modelled.
Telephone Interception Powers
Cartels are generally covert arrangements. Discovery and proof of the existence of a cartel is more difficult than other forms of corporate misconduct, justifying such powers to penetrate the cloak of secrecy.
The Government has therefore decided to amend the Telecommunications (Interception and Access) to enable telecommunications interception powers to be used in addition to other available tools to investigate breaches of the cartel offence.
|
