In a high profile case demonstrating the seriousness with
which Australia's competition regulator, the Australian
Competition and Consumer Commission (ACCC)
will pursue those involved in breaches of the Trade
Practices Act (TPA), the ACCC has
commenced criminal proceedings against the chairman of the Visy
Group of companies, Mr Richard Pratt, alleging that he gave
false evidence to it during its investigation of price fixing
between Visy and a competitor, Amcor, in the corrugated
cardboard carton industry in Australia.
Background – The Visy/Amcor Cartel
In December 2005 the ACCC commenced civil proceedings
against a number of the companies in the Visy Group and a
number of senior executives including its chairman Mr Richard
Pratt, alleging a price fixing cartel in breach of section 45
of the TPA. This followed, among other things, the grant of
immunity from prosecution to Amcor as a result of it blowing
the whistle on the cartel and the issue of a notice pursuant to
section 155 of the TPA requiring Mr Pratt to attend before the
ACCC for examination on oath.
The civil proceedings were eventually resolved with Visy and
Mr Pratt being found liable for their roles in the cartel and
the Visy companies receiving penalties totalling $36 million
from the Federal Court.
Section 155 of the Trade Practices Act
Section 155 of the TPA confers on the ACCC significant
powers to, amongst other things compel the production of
documents and information to it and to require individuals to
attend before the ACCC to be examined on oath where the ACCC
has a reasonable belief that there has been a contravention of
the TPA. Section 155(5) of the TPA prohibits a person from
knowingly furnishing information or giving evidence to the ACCC
that is false or misleading in purported compliance with a
section 155 notice. A contravention of that section is an
offence punishable on conviction by a fine of up to $2,200 or
imprisonment for 12 months.
The Allegations against Mr Pratt
Full details of the allegations against Mr Pratt are not yet
known but reports are that they relate to evidence given by Mr
Pratt during his section 155 examination. The ACCC will bear
the onus of proving beyond reasonable doubt that the evidence
which Mr Pratt gave to it was given by him knowing that it was
false or misleading. It is not yet known whether, and on what
basis, Mr Pratt will defend the proceedings.
At this stage it is not known what penalties the ACCC will
seek in the proceedings against Mr Pratt. There is, however,
precedent for the Federal Court to award prison sentences in
respect of breaches of section 155 of the TPA, the most recent
being a sentence of 6 months imprisonment which was handed down
to Mr Paul John Rana following his conviction for offences
under the TPA including failure to comply with notices issued
under section 155.
It would not be surprising, in our opinion, for the ACCC to
seek a jail term for Mr Pratt should they be successful in
convicting him in respect of the alleged offences because:
the maximum financial penalties under the section are
in the case of a wealthy businessman such as Mr Pratt,
such penalties may not be regarded by the ACCC as having
sufficient deterrent effect; and
while cartel conduct itself is not yet a criminal offence
in Australia, and although these allegations against Mr Pratt
do not directly relate to the cartel offence itself, we would
expect the ACCC to seek to use these proceedings to reinforce
its position that cartel participants should be subject to
the full weight of the criminal law.
It is early days yet in respect of the proceedings commenced
by the ACCC and it is important to bear in mind that these
serious allegations will need to be proven. However, the
commencement of the proceedings themselves sends a very clear
message about the ACCC's determination to seek
appropriate punishment for those it alleges breach the TPA,
particularly where it involves 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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