THE FEDERAL Treasurer Peter Costello’s announcement last month that the Trade Practices Act 1974 is to be amended to include criminal sanctions has reinforced the need for compliance culture, a leading lawyer said.
Bob Baxt AO, competition partner at Freehills, said Costello’s comments signalled the need for companies to start planning now for compliance with the new regime. Costello said that the Federal Government proposes to amend the law to make it a criminal offence for companies to engage in hard core cartel behaviour. Previously, cartel conduct has been classed as a civil breach of the TPA.
“It will be a criminal offence which will lead to a maximum term of imprisonment of five years and a fine for corporations, whichever is the greater of $10 million, or three times the value of the benefit that the cartel got from the illegal arrangement,” Costello said. “The purpose of these changes is to send an absolutely clear signal that this behaviour will not be tolerated. And if any executive would be tempted by the economic gain from entering into a cartel, they should know that they run the risk of imprisonment. We want to send an unmistakably clear signal to executives who might be tempted or to companies who might be tempted, that this kind of behaviour will not be tolerated.”
According to Baxt, those companies with a good compliance record have little to fear, and will be recognised as market leaders, but for those with something to hide, the consequences will stretch beyond corporate financial penalties. “Regulators such as the ACCC are increasingly seeking to ensure that, not only corporate entities, but responsible individuals are prosecuted when the law is contravened,” Baxt said. “The prospect of criminal convictions and custodial sentences for certain breaches of trade practices law brings into sharp focus the personal responsibilities being placed upon executives and directors.”
Costello said that the amendments would be subject to consultation and that that “will take some time”.
Stuart Fagg is the editor of Risk Management magazine, Lawyers Weekly’s sister publication