AFTER YEARS of the Howard government beating around the bush, the Rudd Government has released a draft Bill for consultation which, if introduced, will criminalise serious cartel conduct and impose jail sentences on those involved.
The release of the Bill follows criticism over the settlement reached last year between the ACCC and Visy chairman Richard Pratt over his confessed price fixing, which left the multi-billionaire just $36 million out of pocket. The changes have been a long time coming, with Australia lagging behind other jurisdictions such as the US, the UK and Canada who have already criminalised cartel conduct.
The draft Bill proposes to amend Part IV of the Trade Practices Act 1974, making it an offence to either make, or give effect to a contract that contains a cartel provision with the intention of dishonestly obtaining a benefit. The Bill also creates new civil offences which come without the requirement to prove a dishonest intent.
The new criminal offences come with maximum penalties of five years’ jail time and a $220,000 fine for individuals. Corporations face a fine of up to $10 million, or three times the value of the benefit from the cartel, whichever is the greater. The ACCC will be charged with investigating those suspected of engaging in the criminalised conduct, while the Director of Public Prosecutions will be responsible for their prosecution.
According to Daniel Marks, a special counsel in Holding Redlich’s corporate group, cartel conduct is comparable to other criminal conduct such as theft and fraud.
“Some commentators argue that this sort of cartel conduct is comparable to theft because what the offenders are doing is robbing the community and consumers who purchase the goods and services affected by the cartel conduct. In effect, if you’re pushing up prices because of the conduct then that’s akin to theft,” Marks said. Minter Ellison partner Russell Miller, agreed, calling it “theft with a briefcase”.
Marks believes that an aspect of the new criminal offences that is likely to be the subject of some controversy is the requirement to prove that the accused had a “dishonest” intent. “I think there’ll be some debate on that,” he said.
“At the moment the definition of dishonest under the exposure draft of the Bill is dishonest according to the standards of ordinary people, and known by the defendant to be dishonest according to the standards of ordinary people,” Marks said.
“While that test is a legal concept aimed at representing the general views of the community, it’s a concept that’s difficult to define. This is particularly the case with the subjective element of the test that will be required to ascertain whether the defendant had knowledge that the conduct is dishonest by the standards of ordinary people,” he said.
“This in turn may create difficulty for businesses determining whether they are acting lawfully as well as for the courts in passing judgment.”
According to Miller, there are two opposing viewpoints on the issue that are likely to be brought out in the submission process.
“One view is that it’s a very serious matter to deprive someone of their liberty so you need to draw a certain distinction between people who are dishonest and people who just unwittingly do the wrong thing,” he explained.
“The alternative view is that cartel behaviour is purposeful and illegal. It amounts to theft. And adding an additional burden — having to prove the person was acting dishonestly — may just add too much to the offence.”
Miller believes that the new criminal provisions will act as a deterrent to those who might otherwise risk more borderline conduct. “It sharpens-up attention on cartel behaviour. There will be a level of reform by those involved in matters that might be regarded as being on the edge of legality,” he said.
Submissions on the draft Bill can be made up until the end of February.