Australia: Australian Competition Regulator Cracks Down On Cartels

The first criminal cartel conviction was achieved against Japanese shipping company Nippon Yusen Kabushiki Kaisha (NYK) and, in a civil action, the ACCC succeeded in establishing that Italian corporation, Prysmian Cavi E Sistemi S.R.L. (Prysmian), engaged in cartel conduct, even though such conduct occurred outside Australia.

Australia's competition regulator cracks down on cartels

Last week, the Australian Competition and Consumer Commission (ACCC) achieved two significant wins in its efforts to stamp out cartel behaviour in Australia. The first criminal cartel conviction was achieved against NYK and, in a civil action, the ACCC succeeded in establishing that Italian corporation, Prysmian, engaged in cartel conduct, even though such conduct occurred outside Australia.

Australia's cartel provisions

  • Under Australian competition law, various types of cartel conduct are prohibited, including:
  • price fixing whereby companies agree on pricing rather than competing against each other;
  • sharing markets (where companies agree to divide a market between themselves);
  • rigging bids (when companies agree prior to submitting bids about who will win and at what price); and
  • controlling or limiting goods and services available to buyers.

Division 1 of Part IV of Australia's Competition and Consumer Act 2010 (Cth) (the CCA) (sections 44ZZRA-44ZZRV) sets out the details of the cartel prohibitions and in 2009, Australia introduced criminal offences for cartel behaviour.

For corporations the maximum fine for each criminal cartel offence will be the greater of:

  • AUD10 million;
  • three times the total benefits that have been obtained or are reasonably attributable to the commission of the offence;
  • if the total value of the benefits cannot be determined, 10% of the corporation's annual turnover connected with Australia.

Directors and officers can also be exposed to civil and criminal action including where they have been in any way knowingly concerned in or party to the contravention of the cartel provisions.

Section 79 of the CCA provides that a person who:

(a) attempts to contravene; or

(b) aids, abets, counsels or procures a person to contravene; or

(c) induces, or attempts to induce, a person (whether by threats or promises or otherwise) to contravene; or

(d) is in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of; or

(e) conspires with others to contravene; or

(f) cartel offence provision, is taken to have contravened that provision.

Individuals found guilty of cartel conduct can face criminal or civil penalties, including:

  • up to 10 years in jail and/or fines of up to AUD360,000 per criminal cartel offence; or
  • a pecuniary penalty of up to AUD500,000 per civil contravention.

Further, where proceedings are taken against an individual company officer, the company is prevented from indemnifying the individual for legal costs and any financial penalty.

Criminal cartel conviction of NYK

On 18 July 2016 NYK pleaded guilty to criminal cartel conduct in the Federal Court of Australia. This is the first criminal conviction for a breach of the cartel conduct provisions under Division 1 of Part IV of the CCA.

NYK was charged with a single offence of intentionally giving effect to cartel provisions in an arrangement or understanding with others in relation to the supply of ocean shipping services, knowing or believing that the arrangement or understanding contained cartel provisions. In a public statement made by the ACCC, it specified that the cartel conduct related to the transportation of vehicles to Australia from Japan, India, Thailand, Indonesia, Europe and the US between July 2009 and September 2012. The relevant contracts were with major car manufacturers including Toyota, Suzuki, Nissan, Mazda and Honda.

The investigation of NYK by the ACCC in Australia follows a number of similar investigations into the company worldwide, including:

  • in March 2014 Japan's Fair Trade Commission fined NYK the equivalent of around USD160 million for alleged price fixing behaviour;
  • in 2015 the South African Competition Commission fined NYK USD8.5 million for colluding with various of its competitors in relation to the import and export of vehicles to and from South Africa; and
  • in March 2016 the US Department of Justice jailed an NYK executive for 15 months in relation to price fixing and bid rigging within the roll-on, roll-off cargo market including cars and trucks (following a fine of USD59.4 million in December 2015 for the same set of circumstances).

ACCC Chairman Rod Sims has made a number of public statements that the ACCC intends to continue to take a strong line on anti-competitive conduct and practices (including cartels) and will use criminal sanctions to enforce that strategy. The ACCC has more than r 10 criminal cartel investigations currently underway.

Cartel behaviour by Prysmian

On 21 July 2016 the Federal Court of Australia found that Prysmian had engaged in cartel conduct relating to the supply of high voltage land cables in Australia.

This case concerned tenders for the supply of high voltage land cables and accessories for the Snowy Hydro. The ACCC alleged that Prysmian was party to an agreement with other cable manufacturers and suppliers whereby Prysmian would win that tender. It was alleged that the agreement was effected by providing pricing guidance to Prysmian's competitors so that they submitted higher bids thus ensuring that Prysmian won the tender.

The Federal Court held that the agreement in relation to the Snowy Hydro tender was part of a wider agreement between Japanese and European cable manufacturers and suppliers which allowed for the allocation of high voltage land and submarine cable projects in various parts of the world. Projects offered for tender were allocated to either the Japanese or the European group of manufacturers and then to a particular company within that group. The nominated company would then provide 'pricing guidance' to competitors to ensure that other bids were higher thereby increasing the likelihood that the company allocated the project would win the tender.

The Federal Court has not yet determined how Prysmian will be penalised for that cartel conduct.

The decision has been highlighted by the ACCC as an example of the ACCC enforcing Australian cartel laws in relation to collusive arrangements made outside of Australia where such behaviour has the potential to affect Australian consumers and businesses.


The decisions in relation to NYK and Prysmian reflect the ACCC's efforts to crackdown on cartel behaviour which affects Australian business, even where that behaviour takes place outside of Australia.

Strong enforcement action by the ACCC against multinational corporations mirrors similar steps by other regulators to address cartel behaviour. However, the ACCC is yet to launch a criminal cartel action against an individual and, it remains to be seen whether the ACCC will follow the approach by various overseas regulators and next seek to investigate and prosecute the individuals involved.

Australian Competition Regulator Cracks Down On Cartels

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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