Australia: Large penalties loom for companies that breach competition law


Australian Competition and Consumer Commission (ACCC) chairman Rod Sims has made it clear that 'Pursuing cartel conduct, which is so detrimental to the competitive process, will always be an enforcement priority for the ACCC.'1 In recent years, however, there has been growing public concern that the regulator's purportedly tough stance on these anti-competitive practices was doing little to dissuade corporations, particularly multinational corporations, from undermining the competitive balance of the Australian market.

On 26 March 2018, the Organisation for Economic Co-operation and Development (OECD) published its much anticipated report on Pecuniary Penalties for Competition Law Infringements in Australia (OECD Report). It found that in Australia, both the maximum and average penalties imposed by the Courts for competition law breaches are significantly lower than in the OECD jurisdictions considered, especially for large firms or for long-standing anti-competitive behaviour. The European Union, Germany, Japan, Korea, the United Kingdom and the United States were selected for the analysis because of the comparable state of their competition law regimes.

The OECD Report explains at page 8: 'Looking at the amounts of penalties imposed in Australia in a number of cartel cases up to November 2017 – which exclude more recent cases that are still under appeal – and the base fine that would have been applied in the comparator jurisdictions, the average pecuniary penalty in Australia was AUD 25.4 million (Australian dollars), while the average base penalty in the comparator jurisdictions would have been AUD 320.4 million.'2

It was also highlighted by the Report that while most OECD countries impose financial penalties according to a set methodology which considers the size of the infringing company and its product sales, Australia relies upon the Federal Court to determine penalties following an 'instinctive synthesis' of various factors.

However, a recent Federal Court of Australia case demonstrates that the Court may have an increasing appetite for imposing larger fines.

Australian Competition and Consumer Commission v Yazaki Corporation

Viewed against the background of the OECD Report, the record $46 million fine handed down by the Full Federal Court in ACCC v Yazaki may well mark a shift in judicial attitude towards cartel conduct.

At first instance, Besanko J made declarations that Yazaki Corporation (Yazaki) entered into a cartel agreement with Sumitomo Electric Industries Ltd (Sumitomo) to respect each other's incumbency in particular geographic markets for wire harnesses, which was put into effect by the companies' Australian subsidiaries in response to requests for tender from Toyota in respect of the 2002, 2006 and 2011 Toyota Camry. His Honour considered that a maximum total penalty of $20 million was applicable in respect of two courses of conduct by Yazaki and ultimately ordered it to pay a fine of $9.5 million.

Both parties appealed against that decision on numerous grounds. The focus of the ACCC's grounds of appeal were directed at a finding that the fine was manifestly inadequate.

Rather than just the two courses of conduct identified by Besanko J, the Full Federal Court was prepared to recognise five discrete contraventions of the Australian Competition and Consumer Act 2010 (Cth) (Act), notwithstanding that the conduct which gave rise to each contravention overlapped in some respects. It also found that proceeding on the basis that each course of conduct was punishable by a maximum penalty of $10 million was incorrect when consideration was given to the proper construction of sections 76(1A)(b) and 76(5) of the Act.

Section 76(1A)(b) sets out alternative bases for calculating the maximum pecuniary penalty, being:

  • $10,000,000, or
  • if the Court can determine the value of the benefit that the body corporate, and any body corporate related to the body corporate, have obtained directly or indirectly and that is reasonably attributable to the act or omission – 3 times the value of that benefit, or
  • if the Court cannot determine the value of that benefit – 10% of the annual turnover of the body corporate during the period (the turnover period) of 12 months ending at the end of the month in which the act or omission occurred.

Relevantly, for the purpose of that section, section 76(5) sets out how 'annual turnover' is to be quantified. The Full Court held that, properly construed, section 76(5) required a calculation of 'annual turnover' to include the turnover of related bodies corporate (subject to some specific exceptions) to the infringing body corporate (i.e. the subsidiaries of the infringing body corporate). This construction was influenced by the recognition that the purpose of the section was to set the maximum penalty and not to fix the penalty itself.

Adopting the above construction, the Full Federal Court found that the five contraventions it identified were instead punishable by a maximum total penalty of $87,411,359.30, and ultimately ordered that Yazaki pay $46 million. Yazaki was penalised:

  • $14 million for making the cartel in response to Toyota's request for tender for the supply of wire harnesses for the 2011 Camry
  • $12 million for giving effect to the cartel by discussing and agreeing with Sumitomo the prices they would submit for the request for tender
  • $12 million for giving effect to the cartel by submitting the agreed prices
  • $4 million for directing its subsidiary to submit the agreed prices to Toyota's Australian subsidiary, and
  • $4 million for causing its subsidiary to submit the agreed prices to Toyota's Australian subsidiary.

Impact on Current Prosecutions

By demonstrating a willingness to interpret the applicable statutory provisions consistently with the submissions of the ACCC, the Full Federal Court has put on notice all companies doing business in Australia that breaches of anti-cartel legislation may now attract more significant penalties than previously.

Lessons for Business

ACCC v Yazaki raises important questions for businesses about their governance. The significant penalties that may be imposed by courts means that there is now more imperative for corporations to have strong policies in place to deal with collusive practices. It is also clear that overseas corporations may be held to account by the ACCC where their activities affect competition in an Australian market. Caution should therefore be exercised in respect of business practices which may be acceptable in corporations' home jurisdictions, but which nonetheless constitute a contravention of the Act.

As part of the International Fraud Group established by London firm Mishcon de Reya, McCullough Robertson is well placed to advise on any issues relating to anti-competitive behaviour.

A link to the decision of the Full Federal Court may be viewed here – Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73

We would like to acknowledge the contributions of Intern Ben Previtera.


1 .
2 .

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions