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The Australian Competition and Consumer Commission
(ACCC) has recently written to around 2,500
executives within the construction industry to remind them about
the potential sanctions for cartel conduct. Further, on Saturday, 5
May 2012, the Chairman of the ACCC, Mr Rod Sims, announced that it
"...currently ha[s] a number of important cartel
investigations underway, including cartels that potentially involve
criminal conduct."
These developments signal a clear need for participants in the
construction industry to ensure that the following areas are well
understood:
the laws prohibiting cartel conduct;
the civil and criminal penalty regimes; and
the mechanics of the ACCC's immunity policy for cartel
conduct.
To assist you in your understanding, we provide an overview of
those topics below.
If you have received such a letter from the ACCC and require
assistance to better understand it, or wish to know anything more
about the information contained in this update, please contact one
of our team of competition experts.
The Prohibitions
The Competition and Consumer Act 2010 (Cth)
(CCA) prohibits a corporation from entering into
and giving effect to a contract, arrangement or understanding
that:
contains a "cartel provision", being a provision
that:
has the purpose or effect of fixing, controlling or maintaining
prices for goods or services acquired, supplied or to be resupplied
(price-fixing); or
the purpose of preventing, restricting or limiting output (be
it by way of production, capacity or supply), market sharing or
bid-rigging,
and where at least two or more of the parties to the
arrangement are in competition with each other (Cartel
Conduct); or
contains an "exclusionary provision", being a
provision that has the purpose of preventing, restricting or
limiting the supply or acquisition of goods or services to/from
particular persons or classes of persons, by all or any of the
parties to the contract, arrangement or understanding, where any
two or more of the parties are competitive with each other
(Exclusionary Conduct).
There are a number of exceptions applicable to the Cartel
Conduct and Exclusionary Conduct provisions, such as the joint
venture exception. In the absence of an applicable exception, a
contract, arrangement or understanding that constitutes Cartel
Conduct or Exclusionary Conduct is prohibited outright by the CCA,
regardless of its effect on competition.
The Penalty Regime
If they are found to have contravened the Cartel Conduct or
Exclusionary Conduct provisions, corporations face civil fines of
up to the greater of:
$10,000,000;
if the court can determine the total value of the benefits,
three times that total value; or
if the court cannot determine the total value of those benefits
– 10 per cent of the corporation's annual turnover
during the 12-month period ending at the end of the month in which
the corporation committed, or began committing, the offence.
An individual who commits, or who is otherwise knowingly
involved in criminal Cartel Conduct, may face imprisonment for up
to 10 years, a fine of up to $220,000, or both.
The ACCC's Immunity Policy for Cartel Conduct
The ACCC has an established immunity policy for those who come
forward with information about a cartel. There are a number of
prerequisites to the grant of immunity, including that the
applicant be the "first in".
If you or your company are concerned about whether certain
conduct constitutes Cartel Conduct or Exclusionary Conduct, you
should seek advice from a competition law expert immediately.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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A new record has been set in Australia for fines for misuse of market power. Some are saying a new era of enforcement has dawned in misuse of market power prosecutions.
