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Penalties to increase for cartel conduct with authorities keeping a closer eye
Antitrust authorities around the world continue to look into national and international cartels in 2020, with several jurisdictions showing an upturn in the level of fines imposed from 2019-2020.
Tony Zhang
The EU has taken the top spot in global cartel fines, dwarfing North America and Asia combined. Australia is ranked eighth in terms of country in a global region, without accounting for all EU countries, bringing in US$37.91 million of fines during the 2019 year, according to the Allen & Overy Global Cartel Enforcement Report 2020.
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“A key trend we’ve seen over the past year has been a marked rise in individual liability; here in Australia, that’s been particularly evident in high-profile criminal prosecutions in the banking industry,” Allen & Overy partner Peter McDonald commented.
In Australia, the trend for increased enforcement action, particularly concerning criminal cartels, continued in 2019. Criminal charges were laid by the Commonwealth Director of Public Prosecutions (CDPP) in two cases – one against global shipping company Wallenius Wilhelmsen Ocean AS in relation to international shipping of vehicles to Australia, and the other against a money transfer business and five individuals for allegedly fixing the Australian dollar and Vietnamese dong exchange rate and fees charged to customers.
“In the post-Hayne landscape, public scrutiny of individuals, companies and regulators is running high; as a result, we anticipate a rise in white-collar criminal prosecutions,” Mr McDonald said.
“Interestingly, the courts are moving to higher penalties for cartel conduct, reflecting public angst over unethical conduct in the Australian corporate sphere. Courts are ordering significantly higher fines, sometimes even beyond those recommended by the ACCC.
“Five to 10 years ago, it was an entirely different regulatory environment; now, corporations need to tread more carefully in the face of increasingly heavy fines.”
According to the report, in relation to an ACCC investigation now subject of civil cartel proceedings, the CDPP for the first time charged an individual with inciting the obstruction of a Commonwealth official.
The charges alleged that former Bluescope executive Jason Ellis took actions to obstruct an ACCC investigation into alleged cartel conduct by the company.
Looking ahead to 2020, more can be expected of high-level ACCC cartel enforcement, with focuses on individual accountability and the trend of courts imposing more substantial penalties to continue, according to the report.
The criminal cartel prosecution against three banks, and several senior executives for alleged cartel arrangements relating to trading in ANZ shares, is still in its very early stages, many months after charges were laid in June 2018.
A fourth bank was granted conditional immunity in exchange for ongoing cooperation with the ACCC and CDPP. At the time of writing, committal proceedings were underway, with the case expected to go to trial later in the year.
Australia also has a 33 per cent application for leniency in the selected jurisdictions of cartel decisions whilst compared to other countries, leniency remains the key enforcement tool in many jurisdictions. One hundred per cent of decisions in the EU, UK and Japan included an immunity/leniency applicant, but notably, immunity/leniency applicants featured in only 13 percent of decisions in China and only 8 percent of decisions in the US.
Digital markets and platforms are expected to continue to dominate the antitrust debate in 2020 with Australian authorities watching carefully.
Many authorities, including those in Australia, are introducing specialist digital units and are harnessing new technologies to improve their detection and investigation capabilities. Compliance initiatives by companies are already adapting in response.
“Previously, we saw more enforcement activity in sectors like energy and resources, but now we’re seeing a focus in the digital sphere,” Mr McDonald said.
“The nature of commerce is changing as we adapt to digital transformation of virtually every sector, and subsequently regulators are tackling new and emerging challenges as technology changes the way we do business; this has been reflected in the rapid set-up of digital units within regulatory bodies in Australia and around the world.
“Increasingly, we’re seeing tension at the intersection of whistleblower immunity and the possibility of being prosecuted in an ensuing class action. People generally think carefully before blowing the whistle when the possibility of a large class action is increasingly likely in Australia.”
