Australia: Jail time for Price Fixing, Bid Rigging, or Agreeing to Share Markets

Competition and Market Regulation Update
Last Updated: 27 June 2011
Article by Jason Woolley and Mark Williamson

A draft Bill providing for jail time for cartel conduct (price fixing, bid rigging, and / or agreements to share markets or limit output) was released by the Government last week. Under the draft Bill, individuals found guilty of the proposed criminal offence for cartel conduct will be liable for up to 7 years' imprisonment. The penalty for companies found guilty of the proposed criminal offence for cartel conduct remains, at one level, the same as the current maximum civil pecuniary penalty under the Commerce Act 1986 (the Act) - $10 million or 3 times the commercial gain or 10% of turnover - although companies would also have the additional stigma of a criminal conviction.

In setting the maximum period of imprisonment at 7 years, the drafters of the Bill have put cartel conduct on a par with the offences of:

  • Wounding with intent to cause grievous bodily harm (s 188 of the Crimes Act 1961)
  • Money laundering (s 243 Crimes Act 1961)
  • Being party to treason (s 76 Crimes Act 1961)
  • Bribery of judicial officers (s 101 Crimes Act 1961)
  • Possessing forged bank notes (s 263 Crimes Act 1961)
  • Arson (s 267 Crimes Act 1961)
  • Using or producing anti-personnel mines (s 7 Anti-Personnel Mines Prohibition Act 1998)

By way of comparison the maximum period of imprisonment for the following offences is 5 years or less:

  • Insider trading (s 43 Securities Markets Act 1988)
  • Making false statements in financial statements (s 41 Financial Reporting Act 1993)
  • Wilful ill-treatment of animals (s 28 Animal Welfare Act 1999)
  • Carrying a firearm with criminal intent (s 55 Arms Act 1983)
  • Various offences under the Companies Act relating false or fraudulent acts, claims or statements (s 373 Companies Act 1993)
  • Wilfully ill-treating or neglecting children in one's custody (s 195 Crimes Act 1961)
  • Aggravated burglary (s 232 Crimes Act 1961)

In Australia and the US, the maximum period of imprisonment for cartel conduct is 10 years and in Canada it is 14 years. In the UK the maximum period of imprisonment is 5 years.

How is cartel conduct defined?

The draft Bill repeals sections 30 to 33 of the Act and replaces them with 7 new sections:

  • Section 30 which prohibits both the entering into of contracts, arrangements or understandings which contain 'cartel provisions' and giving effect to such provisions (the cartel prohibition).
  • Section 30A which defines 'cartel provision' as a provision with the purpose of:
    • Price fixing i.e. fixing the price of goods or services supplied or acquired by the parties in competition with each other; or
    • Restricting output i.e. preventing, restricting or limiting the production of goods, capacity to supply services, or supply or acquisition of goods or services that are supplied or acquired by the parties in competition with each other; or
    • Market allocating i.e. allocating between the parties persons, or classes of persons, to or from whom, or geographic areas in which, the parties supply or acquire goods or services in competition with each other; or
    • Bid rigging i.e. restraining one or more of the parties from making a bid, or requiring the bid of 1 party to be in accordance with a contract, arrangement or understanding between the parties, where the parties are in competition with each other for the supply or acquisition of the goods or services to which the bid relates.
  • Section 30B extends the application of the cartel prohibition to the parties' interconnected bodies corporate.
  • Section 30C limits the application of the cartel prohibition to conduct occurring after the cartel prohibition comes into force.
  • Section 31 provides a broad exemption from the cartel prohibition for 'collaborative activity' where the cartel provision is 'reasonably necessary' for the collaborative activity. 'Collaborative activity' is an activity in trade carried on in cooperation by at least 2 persons that is not carried on for the dominant purpose of lessening competition.
  • Section 32 provides an exemption for cartel provisions with the purpose of bid rigging where the person running the bid is notified in advance, by one or more of the parties, of the essential features of the cartel provision and the person running the bid agrees that the parties may make a bid.
  • Section 33 provides for an exemption for joint buying and promotion arrangements similar to the existing exemption in section 33 of the Act.

What separates criminal cartel conduct from non-criminal cartel conduct?

Under the draft Bill a person is only guilty of criminal cartel conduct if they breach section 30 in the knowledge that the relevant cartel provision is a cartel provision. This means they have knowledge of the essential facts that make the cartel provision a cartel provision. An offender need not know that those essential facts constitute a 'cartel provision' as defined in the Act. For example, in relation to price fixing, the offender would need to know that the provision fixed the price of goods or services and those goods or services were supplied or acquired by the parties in competition with each other.

Someone who lacks the requisite knowledge may still be guilty of civil cartel conduct. To that extent the new sections 30 to 33 introduce parallel criminal and civil cartel prohibitions. The decision as to whether to deal with breaches of the cartel prohibition by criminal prosecution or by civil proceedings is a matter for the discretion, in the first instance, of the Commerce Commission.

The Explanatory Material released with the draft Bill indicates that the Commerce Commission will develop guidelines on when the Commerce Commission will pursue criminal proceedings and when proceedings will be commenced civilly.

Commerce Commission can 'clear' pro-competitive collaborative activity

For those seeking a greater level of certainty in relation to proposed collaborative activities, the draft Bill introduces a regime whereby the Commission can, on the application of someone proposing to enter a contract, arrangement or understanding containing a cartel provision, grant a clearance to that person. A person granted clearance does not breach the Act by entering into the relevant contract, arrangement or understanding or by giving effect to relevant the cartel provision.

A clearance is available if the Commission is satisfied that:

  • The cartel provision is reasonably necessary for the collaborative activity; and
  • The collaborative activity will not, or will not be likely to, substantially lessen competition in a market.

Clearance can however be rescinded in the event of a material change of circumstances.

Transitional provisions in the draft Bill provide a 12 month window of opportunity for clearances to be sought before the provisions introducing the rest of the draft Bill comes into force.

Other amendments

The draft Bill also proposes a range of other amendments including:

  • Repeal of section 4(3) of the Act which currently provides for extra-territorial jurisdiction over overseas mergers to the extent they affect markets in New Zealand. It is replaced with a new regime giving the High Court power, on the application of the Commerce Commission, to make a declaration that the acquisition of a controlling interest in a New Zealand company by an overseas person will substantially lessen competition in a market in New Zealand. In those circumstances the New Zealand company must cease carrying on business in the relevant New Zealand market no later than 6 months after the declaration is made.
  • The current 10 working day period provided in section 66(3) of the Act for the Commerce Commission to process applications for business clearance is extended to 40 working days. As the current period is invariably extended by agreement between the Commission and the person making the application this is recognition of existing practice.
  • Providing that conduct engaged in on behalf of a person other than a body corporate, at the direction or with the consent or agreement of that person, is deemed to have been engaged in also by that person.

The Ministry of Economic Development is seeking public submissions on the draft Bill with the submission period closing at 5pm on 22 July 2011. The draft Bill and related material is available at

The Explanatory Material accompanying the draft Bill states that Cabinet has yet to make a final decision on whether to criminalize cartel conduct. However given that Australia has already done so, and that under the Single Economic Market agenda, the Government has committed to ensuring that those who engage in anti-competitive behavior in Australia or New Zealand face similar penalties, it is probably only a question now of the exact form that criminalization will take. If you would like to discuss making a submission on the draft Bill please contact either Jason Woolley or Mark Williamson.

© DLA Piper

This publication is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not used as, a substitute for taking legal advice in any specific situation. DLA Piper Australia will accept no responsibility for any actions taken or not taken on the basis of this publication.

DLA Piper Australia is part of DLA Piper, a global law firm, operating through various separate and distinct legal entities. For further information, please refer to

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.