Last week, the federal Government unveiled the Trade Practices
Amendment (Cartel Conduct and other Measures) Bill 2008, and with
it signalled a renewed focus on tackling cartel behaviour in
What is cartel behaviour?
At its broadest point, a cartel is any arrangement between two
or more businesses which has the effect of lessening competition in
the marketplace. Common examples include:
Bid rigging; and
Controlling market output.
Cartel behaviour distorts economic markets through artificial
price manipulation, choice reduction and the weakening of ordinary
On releasing the new Bill, the Assistant Treasurer and Minister
for Competition Policy and Consumer Affairs Chris Bowen
"We have always said a jail term for cartel offences sends
a clear message - price-fixing is theft from consumers and
won't be tolerated in this country."
"Criminalising cartels, at long last, brings this country
into line with the United States, Canada and the United Kingdom who
have had similar sanctions in place for some time now."
By their very nature, cartels are covert operations. New
telephone interception powers will seek to penetrate this veil of
secrecy, making it easier for authorities to investigate and
prosecute offenders who would otherwise escape prosecution.
The Bill also prescribes new and additional penalties for the
offence of 'giving effect to a cartel'.
For individuals, the maximum penalty is a term of imprisonment
for 10 years and/or a maximum fine of $220,000.
For corporations, the maximum penalty the greater of $10 million
or three times the value of the benefit from the cartel, or where
the value cannot be determined, 10 per cent of annual turnover.
Claims of innocent intent irrelevant
Significantly, authorities are not required to prove that the
individual or corporation had the 'intention of dishonestly
obtaining a benefit.' In justifying this, Chris Bowen said,
"What we didn't want to see was the position where
people ... could come forward with the defence where, 'this is
always the way it has been done around here ... we just thought it
was a good way to do business ... we weren't meaning to rip
While prosecutors still need to prove the offence beyond
reasonable doubt and meet certain 'fault' elements which
are automatically applied under the Commonwealth Criminal Code, the
ability to prosecute passive cartel participants appears to have
been greatly increased. The real effect, however, remains to be
Compliance the best defence
With the Bill being introduced to Parliament by year end, now,
more than ever, compliance provides the best defence. Ensuring all
relevant people understand the requirements and limitations imposed
on conduct is critical in protecting your business and its people.
The cost of not acting is simply too great.
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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