1.1 The Senate Standing Committee on Economics has recommended
that the Senate pass the Trade Practices Amendment (Cartel Conduct
and Other Measures) Bill 2008 ("Bill").
1.2 If passed the effect on the Bill will be to create a
criminal offence of:
giving effect to;
a contract arrangement or understanding that contains a Cartel
1.3 For individuals these offences carry a maximum gaol term of
10 years and/or a fine not exceeding $220,000.
1.4 For corporations, the fine for a criminal Cartel offence is
not to exceed the greater of:
three times the total value of benefits gained from the
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 the offence.
2. What is a Cartel Provision?
2.1 A criminal Cartel provision is one that is contained within
a contract, arrangement or understanding between competitors and
relates to conduct that may be described as:
sharing or allocating a customer base;
restricting supply; or
rigging a tender process.
If has become common to refer to such behaviour as "hand
core" Cartel conduct.
3. Criticisms of the Bill
3.1 A number of submissions to the Senate Committee criticised
the fact that the Bill did not distinguish between conduct which
would be subject to criminal sanctions and conduct which would be
more appropriately dealt with by civil proceedings under the Trade
Practices Act. A primary concern was that business would not have
sufficient clarity as to what conduct might attract criminal
sanctions and the Bill might consequently stifle legitimate
competitive behaviour, or at least, behaviour which did not cause
significant detriment to consumers.
3.2 The Committee's response was essentially two-fold:
persons with concerns as to whether their behaviour would
contravene the new provisions could seek authorisation for such
conduct from the ACCC;
it was important that the ACCC retained flexibility in
determining which conduct it considered warranted prosecution as
"hard-core" Cartel conduct and which was undeserving of
3.3 In this regard, the Committee noted that:
if was ultimately up to the Commonwealth DPP as to whether or
not to prosecute;
a requirement of acting 'dishonesty', originally
contained with the Bill but subsequently omitted, would unduly
restrict successful prosecutions (as it observed had occurred in
the United Kingdom); and
the ACCC had entered into a MOU with the CDPP as to what
circumstances would warrant prosecution and recommended that the
ACCC issue guidelines to the public based on the MOU which would
provide some level of clarity to business.
4. The way forward
4.1 The enactment into law of the Bill is likely in the first
half of 2009.
4.2 All businesses need to give critical consideration to any of
their operational practices which may lead to inadvertent breaches
of the new provisions and give consideration to whether or not to
seek authorisation from the ACCC for any behaviour which may give
rise to concerns.
4.3 Further comment will be provided on the ACCC guidelines once
these are published.
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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