find the latest legal job
Corporate Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Highly-respected, innovative and entrepreneurial Not-for-Profit · Competency based Board
View details
Chief Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Dynamic, high growth organisation · ASX listed market leader
View details
In-house Projects Lawyer | Renewables / Solar | 2-5 Years PQE
Category: Generalists - In House | Location: All Australia
· Help design the future · NASDAQ Listed
View details
Insurance Lawyer (3-5 PAE)
Category: Insurance and Superannuation Law | Location: Brisbane CBD & Inner Suburbs Brisbane QLD
· Dynamic organisation ·
View details
Legal Counsel
Category: Corporate and Commercial Law | Location: North Sydney NSW 2060
· 18 month fixed term contract · 3-5 years PQE with TMT exposure
View details
Cartels-could-face-jail-ACCC

Cartels-could-face-jail-ACCC

Talk of cartels often conjures up images of shadowy mobsters, but if the ACCC has its way, cartel operators could be going the same way as Al Capone: to jail. Stuart Fagg reportsAt present,…

Talk of cartels often conjures up images of shadowy mobsters, but if the ACCC has its way, cartel operators could be going the same way as Al Capone: to jail. Stuart Fagg reports

At present, Australia’s cartel enforcement regime is a civil one and offenders cannot end up behind bars for participating in one. However, recommendations have been made that criminal penalties be introduced for serious cartel activity.

The Dawson inquiry into the competition provisions of the Trade Practices Act 1974 (TPA) in 2003 has been the main driver for those seeking jail sentences. The introduction of such measures in the UK and the US has led to measurable success, and pundits believe it’s only a matter of time before Australia follows suit. The Australian Competition and Consumer Commission (ACCC), which would have to enforce any such law, recently spoke out in favour of criminal proceedings.

“The ACCC has been a strong supporter of this approach,” said Jennifer McNeill, ACCC commissioner.

“We regard hard-core cartel conduct as one of the most damaging forms of anti-competitive behaviour. The gains to cartel participants can be large and the risk of detection is low. Cartel behaviour is in reality a form of theft and little different from classes of corporate crime that already attract criminal sentences.”

According to McNeill, the ACCC’s lobbying for criminal penalties is designed to force companies into TPA compliance. Although almost every company in Australia comes under the watch of the ACCC, compliance with the TPA is sometimes neglected to focus on other compliance issues.

“Although there are many moral businesses and business people, some businesses and business people need an external incentive to comply with the law — a risk benefit that weighs heavily against involvement in unlawful cartels.”

Although financial penalties are already in effect, McNeill said ultimately financial penalties could become another ‘tax on minor misdemeanour’ and the risk of incurring them could become a cost of doing business.

Overseas experience shows, meanwhile, that although substantial financial penalties are available to the courts, they may not be imposed and that penalties will often end up being passed on to the consumer in the form of higher prices.

“Let me give one example,” she said. “It has been estimated that the total value worldwide of the commerce affected by the international vitamin cartel was in the order of $20 billion. Conservative estimates would imply a total gain to the three participants in that cartel of $1 billion to $2 billion. Once the risks of detection are factored into the calculation, the optimal penalty is between $6 billion and $14 billion. Taking into account record penalties imposed worldwide and civil damages the participants have actually paid an amount in the order of $2 billion.”

But there are sticking points. One of the concerns of the Dawson Committee was the difficulty in arriving at a satisfactory definition of ‘serious’ or ‘hardcore’ cartel behaviour in Australia. Additionally, legal experts continue to debate whether the threat of criminal proceedings actually encourages deterrence in terms of corporate laws.

Although the number of cartels operating in Australia is difficult to calculate, ACCC chairman Graeme Samuel said earlier this year that the commission was investigating five major cartels. “I think there’s probably a lot more,” he said. “I think what we’ve got is — cartels thrive on secrecy. The general public don’t know much about them because they thrive on secrecy.”

Stuart Fagg is the editor of Lawyers Weeklys sister publication Risk Management.

Like this story? Read more:

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

The legal budget breakdown 2017

Cartels-could-face-jail-ACCC
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
LCA president Fiona McLeod SC
Aug 17 2017
Where social fault lines meet the justice gap in Aus
After just returning from a tour of the Northern Territory, LCA president Fiona McLeod SC speaks wit...
Marriage equality flag
Aug 17 2017
ALHR backs High Court challenge to marriage equality postal vote
Australian Lawyers for Human Rights (ALHR) has voiced its support for a constitutional challenge to ...
Give advice
Aug 17 2017
A-G issues advice on judiciary’s public presence
Commonwealth Attorney-General George Brandis QC has offered his advice on the public presence of jud...
APPOINTMENTS
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
opinion
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
Help
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...