New laws making cartel conduct a criminal offence in Australia
have been the focus of significant media attention over the past
few months. Corporate Australia is now on notice that as of July
24, if they risk engaging in cartel conduct not only will they face
heavy penalties, they may end up in jail for up to 10 years.
But executives who think the long arm of the law ends at
Australia's borders should think again. For the first time,
Australians who engage in cartel conduct in countries where cartel
conduct is a criminal offence now face the prospect of extradition.
It is a risk that is real.
Since May 1999, more than 30 foreign nationals from countries
including France, Germany, Japan, Korea, Norway, the Netherlands,
Sweden, Switzerland and the UK have served or are serving prison
sentences in the US for participating in or for obstructing an
investigation of an international cartel.
Previously, an Australian could not be extradited under the
Extradition Act 1988 (Cth) to face criminal prosecution for cartel
conduct in overseas countries. This is because extradition is not
possible unless the relevant offence is a criminal offence in
Australia and in the country seeking extradition. This is known as
the "dual criminality" requirement. This requirement is
now satisfied in the case of cartels.
International competition enforcement authorities are also
showing an increasing willingness to co-operate to ensure their
country's respective laws are upheld and wrongdoers brought to
This co-operation was recently highlighted by the prosecution of
three UK executives – Peter Whittle, David Brammar and
Bryan Allison – in relation to a cartel involving marine
hoses used to transfer oil from tankers to storage facilities.
Allison was the managing director and Brammar the sales director of
marine hose manufacturer Dunlop Oil and Marine.
Whittle was a consultant engaged to co-ordinate their global
price-fixing activities. The three, along with five other foreign
executives, were arrested in the US following a covert operation
involving the US Department of Justice and the UK Office of Fair
After pleading guilty in the US, the three were returned to the
UK to face court as part of a plea agreement. They again pleaded
guilty and were sentenced to terms of imprisonment of between 21/2
and three years.
In another recent case, the former chief executive of Morgan
Crucible, Ian Norris, was charged in Pennsylvania with conspiring
to fix the price of carbon in the 1990s.
Although Norris escaped extradition to the US on those charges
– because price fixing was not a criminal offence in the
UK at the relevant time – the UK High Court determined
that the extradition should go ahead on additional charges of
obstructing justice during the investigation.
There is no doubt that July 24 marks a line in the sand for
cartel conduct involving Australians. There is now a greater risk
of cartel behaviour being uncovered, and those involved prosecuted,
both in Australia and any overseas country where the conduct
breaches that country's cartel laws and with which Australia
has an extradition treaty.
Cartels may mean business, but so does the law.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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