Prison sentences for cartel conduct are now a stark reality in
Australia, with the Trade Practices Amendment (Cartel Conduct
and Other Measures) Bill 2008 set to become law in just
Having been passed by Federal Parliament earlier this week, the
legislation criminalises price fixing, market sharing, bid rigging
and arrangements to restrict output. It imposes gaol terms of up to
10 years and fines of up to $10m for corporations and $220,000 for
individuals caught breaking the law. The amendments also enhance
the ACCC's investigatory powers, granting it the ability to use
telephone interception powers in addition to other investigatory
tools such as search warrants and compulsory notices.
The new criminal sanctions have been a long time coming. It was
in 2003 that the Dawson review of the Trade Practices Act
recommended that serious cartel conduct should be punishable as an
offence and the legislation has gone through several iterations and
much public scrutiny before finally being enacted this week.
The new law carries with it a number of uncertainties,
particularly the operation of the law in respect of legitimate
joint-ventures with competitors. This makes seeking informed legal
advice from a competition specialist at the outset of any deal a
The ACCC has already stated that it will not engage in civil
settlement negotiations where criminal prosecution is available. It
is therefore vital that corporate Australia is made aware that
these offences will have application from the time the legislation
comes into force, which is expected to be early August. While it
does not apply retrospectively, the continuation of any existing
cartel arrangements will be a criminal offence.
With the ACCC offering immunity only to the first party to
inform it of illegal arrangements, existing cartel participants
will now have a much greater incentive to report each other - no
one is going to risk going to gaol in order to save others.
In this climate, corporate counsel and responsible executives
need to actively scrutinise their organisation to satisfy
themselves that illegal conduct is not taking place. Now, more than
ever before, senior executives and corporate counsel must ensure
that their business has a comprehensive and effective compliance
regime in place that includes face-to-face training and counselling
from an experienced competition law expert. Companies must commit
themselves to ongoing and consistent efforts to develop a culture
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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