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Australia – Cartels: Enforcement, Appeals & Damages Actions.

20 February, 2014

 

Legal News & Analysis – Asia Pacific – Australia  Competition & Antitrust

 

Overview Of The Law And Enforcement Regime Relating To Cartels


In Australia, the drafting of legal prohibitions on cartel conduct is convoluted and opaque. In essence, price-fixing, bid-rigging, output restrictions and market sharing are all prohibited.
The prohibitions are contained in the federal Competition and Consumer Act 2010 (Cth) (CCA). Relevantly, a corporation is prohibited from making or giving effect to a contract, arrangement or understanding which contains a “cartel provision”.


A “cartel provision” is one which contains:

 

  • the “competition condition”; and
  • either the “purpose/effect condition” or the “purpose condition”.

The “competition condition” is satisfied if at least two of the parties:

 

  • are, or are likely to be, in competition with each other in relation to the supply, acquisition or production of the relevant goods/services; or
  • would be, or would be likely to be, in competition with each other in relation to the supply, acquisition or production of the relevant goods/services but for any contract, arrangement or understanding between them.

The “purpose/effect condition” concerns price-fixing conduct.


The “purpose condition” concerns other forms of cartel conduct, namely: restricting outputs in the production and supply chain; allocating customers, suppliers or territories; or bid-rigging. Cartel conduct may be prosecuted as a civil contravention or, since July 2009, a criminal offence. The civil prohibition provisions are set out in sections 44ZZRJ and 44ZZRK of the CCA. The criminal offence is set out in sections 44ZZRF and 44ZZRG of the CCA. To commit the criminal offence, those involved must have either known or believed they were making or giving effect to a contract, arrangement or understanding containing a “cartel provision”. This is known as the “fault element”.


In 2012, the Australian Government introduced a prohibition on “price signalling” in the financial services sector. To date, the Australian Competition and Consumer Commission (ACCC) has not prosecuted a firm for contravention of this prohibition and accordingly, its effectiveness remains to be seen.


Sanctions for contraventions of the cartel conduct prohibitions are ultimately imposed by the Federal Court of Australia in civil proceedings initiated and enforced by the ACCC, and in criminal prosecutions initiated by the Commonwealth Director of Public Prosecutions (CDPP).


The ACCC’s responsibilities include investigating cartel conduct, gathering evidence, dealing with immunity applications (in consultation with the CDPP), conducting civil enforcement proceedings and referring serious cartel conduct to the CDPP for criminal prosecution.
The CDPP is a statutory authority, which is independent of the ACCC. The CDPP’s responsibility is, relevantly, to prosecute serious criminal cartel offences.


The CCA confers a right of private action for damages. The Federal Court of Australia rules permit class action for damages. The CCA also empowers the ACCC to initiate representative actions to recover damages on behalf of persons who suffer loss or damage from cartel conduct.


Overview Of Investigative Powers In Australia


The CCA confers on the ACCC broad powers of investigation including the power to issue a notice (under s.155 of the CCA) ordering the production of documents or information, or requiring the attendance by individuals for interview, including under oath. The ACCC may issue a notice where it has “reason to believe” that the recipient of the notice is capable of furnishing information, producing documents or giving evidence relating to a matter that constitutes or may constitute a contravention of the CCA. This is a relatively low threshold.
Unreasonableness, oppressiveness, uncertainty or ambiguity of itself will not invalidate a notice. The ACCC, however, is not entitled to “fish” for information, documents or evidence − there must be reasonable grounds for its belief related to the facts known or suspected, and the notice must specify what is sought with sufficient particularity to enable the recipient to know what is required.


A notice can be issued at any time prior to the commencement of proceedings (except in relation to proceedings for an injunction, where the power can be exercised until the close of pleadings). The ACCC is therefore able to obtain full disclosure of relevant documents from a prospective defendant before commencing court proceedings.


The ACCC may also carry out (either by consent or with a warrant issued by the court) unannounced searches of business and residential premises (“dawn raids”), and in doing so may copy computer hard drives, seize original documents and secure premises overnight. The ACCC may seek the assistance of the Australian Federal Police to carry out such searches.


Importantly, the CCA expressly precludes the ACCC from requiring production of documents that would disclose information that is the subject of legal professional privilege. There is, however, no privilege against self-incrimination.


Criminal sanctions exist for failing to comply with a compulsory notice issued by the ACCC to the extent a recipient is capable of complying with it, knowingly provides false or misleading information in response to a notice, or obstructs an authorised ACCC offi cer who enters premises to take possession of documents. The ACCC takes a strict approach to compliance with issued notices.


In addition, the ACCC and Australian Federal Police may, under warrant, exercise interception powers in investigations.


Access by cartel class action plaintiffs to information and documents supplied to the ACCC by immunity and leniency applicants is very contentious and is discussed below.


Overview Of Cartel Enforcement Activity During The Last 12 Months


At any one time, the ACCC has between 40 and 50 cases in the Federal Court of Australia. Approximately one quarter of these relate to competition issues, and currently, there are approximately eight cartel enforcement matters before the Federal Court of Australia.


In the last 12 months, the Federal Court of Australia has imposed $A41.85m in civil pecuniary penalties in five separate cases for breaches of the cartel conduct provisions. In each of the proceedings, the penalty imposed by the court was one agreed between the parties.


The ACCC also reports that it currently has more than 10 in-depth cartel investigations under way relating to both local and international conduct.


Key Issues In Relation To Enforcement Policy


The ACCC has been an active advocate for the enforcement of the prohibitions on cartel conduct. In 2001, the ACCC initiated a campaign for the introduction of criminal sanctions for cartel conduct in Australia. Since 2008, cartel conduct has been identified as the top priority on the enforcement agenda of the ACCC. In the last eight years, the ACCC has commenced more proceedings in respect of alleged breaches of the cartel conduct prohibitions than any other competition provision in the CCA.


The ACCC has secured admissions of liability and agreement to submit to penalties in the majority of cases commenced for alleged cartel conduct. The penalties imposed in those cases have been significant; the highest imposed under the CCA. For example, in the Visy/Amcor cardboard packaging cartel, Visy was fined $A36m and fi nes to individuals totalled $A2m; in the animal vitamins cartel, penalties of $A26m were imposed against the Australian suppliers; and penalties of $A98.5m have been imposed in relation to the airline surcharge cartel (cases against some airlines are on-going).


The ACCC has invested signifi cant resources in general education to raise awareness of, and promote compliance with, the prohibitions on cartel conduct. This has included the production and distribution of a short educational film which was sent to the CEOs of the top 300 ASX listed companies.


Key Issues In Relation To Investigation And Decision-Making Procedures


Investigatory Powers


As discussed above, the ACCC has broad investigatory powers under the CCA.


Decision-Making Processes


The ACCC will distinguish “serious cartel conduct” from cartel conduct which may be less serious in nature. It considers that “serious cartel conduct” should be prosecuted criminally and it will refer such matters to the CDPP together with all relevant evidence it has obtained. Pursuant to a Memorandum of Understanding (MOU) between the ACCC and the CDPP, the ACCC will recommend criminal charges where there is large-scale or serious economic harm. In making this determination the ACCC will have regard to, amongst other things, whether:

 

  • the conduct was long-standing or had/could have had a signifi cant impact on the market;
  • the conduct caused/could have caused signifi cant detriment to the public or to customers;
  • there was prior cartel conduct (either criminal or civil); and/or
  • in excess of $A1m of trade or commerce was affected within the previous 12-month period.

In circumstances where the ACCC does not refer a cartel matter to the CDPP or the CDPP advises that it will not pursue a criminal prosecution (by reference to the Commonwealth Prosecution Policy), the ACCC may decide to pursue the matter by way of civil penalty proceedings.


Unlike the position in some other jurisdictions, the ACCC has no power to issue penalties for cartel conduct. The ACCC must commence proceedings in the Federal Court of Australia against a party alleging cartel conduct and, if successful, may seek penalty orders from the court. Concurrent civil proceedings will be stayed where a criminal prosecution has been commenced.


The ACCC has six years from the date of the contravention to bring an action for a civil pecuniary penalty. Criminal prosecutions for cartel conduct are not subject to any limitation period, although the criminal offence prohibitions only commenced in 2009 and do not have retrospective effect.


There is no requirement that the ACCC or CDPP conduct their investigations within a particular time frame, nor that the courts reach a final decision on infringement within a specified period of time. Penalty hearings will usually follow an infringement hearing/decision.


Leniency/Amnesty Regime


Immunity


The ACCC operates an immunity policy for cartel conduct, pursuant to which it grants civil immunity. Immunity from criminal prosecution is granted by the CDPP in accordance with the same principles that determine the ACCC’s immunity policy. All applications for immunity for civil proceedings and criminal prosecution are made to the ACCC.


Conditional immunity is available where, in summary, the corporation/individual:

 

  • was a party to a cartel;
  • admits its conduct in the cartel may contravene the CCA;
  • is the first person to apply for the immunity;
  • did not coerce others to participate, and was not the clear leader, in the cartel;
  • has ceased or indicates that it will cease its involvement in the cartel;
  • undertakes to provide full disclosure and cooperation to the ACCC (this condition continues throughout the ACCC’s investigation and any subsequent court proceedings); and
  • at the time ACCC receives the application, the ACCC has not received written legal advice that it has suffi cient evidence to commence proceedings in relation to the cartel.

Where the ACCC is satisfi ed that an applicant meets the conditions of immunity, it will make a recommendation to the CDPP that immunity from prosecution be granted. The CDPP exercises independent discretion in granting immunity but will consider recommendations of the ACCC.


The ACCC’s immunity policy allows for individuals to apply for immunity independently of their employer.


The ACCC operates a ‘marker’ system. To obtain a marker the immunity applicant (typically through its legal representative) must provide to the ACCC a description of the cartel conduct in sufficient detail to allow the ACCC to confi rm that no other person has applied for immunity or obtained a marker in respect of the cartel, and that the ACCC has not received written legal advice that it has sufficient evidence to commence proceedings in relation to conduct arising from the cartel. Satisfaction of all the requirements of conditional immunity is not required at the time of request. The effect of the marker is to preserve, for a limited period (generally 28 days), the marker recipient’s status as the first person to apply to the ACCC for immunity in respect of the cartel.


Information provided by immunity applicants may be used in civil proceedings and/or criminal prosecutions. Information provided by applicants may be shared with the CDPP. Information provided by a marker holder to satisfy the requirement of conditional immunity is considered by the ACCC to be information in support of an application for immunity. Where immunity/conditional immunity is revoked, the ACCC is entitled to use information provided against the immunity applicant (or any of its directors, officers or employees) in civil and/or criminal proceedings.


Leniency


If a person co-operates with the ACCC’s cartel investigation despite being ineligible for immunity (because another person has been granted conditional immunity in relation to that cartel), the ACCC may recommend to the court a reduced penalty in civil proceedings and recommend to the CDPP a reduced fine or sentence in criminal matters. If, in addition to cooperating with investigations into the first cartel, such a person reports a second cartel, and is granted conditional immunity in relation to the second cartel, the ACCC will recommend to the court a reduced penalty in civil proceedings, and recommend to the CDPP that a reduced fi ne or sentence in criminal matters be further reduced in relation to the first cartel.


Enforcement


The operation of the ACCC’s immunity policy for cartel conduct is an important aspect of enforcement. Since the introduction of the policy in 2003, the majority of cartels investigated by the ACCC have been brought to its attention by applications for immunity. To date, the ACCC has received approximately 115 approaches under the policy. There is no legislative basis for the operation of the immunity policy for cartel conduct and accordingly courts do not review or control applications for immunity.


There are some important considerations for would-be immunity applicants. These include the risk of private class action claims for damages in Australia and/or other jurisdictions (in the context of international cartels) and, in particular, access by cartel class action plaintiffs to information and documents supplied to the ACCC by immunity and leniency applicants. This remains a contentious issue in Australia.


The ACCC has sought to encourage would-be applicants by:

 

  • accommodating a part paperless process: immunity applicants are not required to submit a written application. The immunity, investigatory and litigation processes, however, inevitably involve a significant volume of information and documents being provided to or created by the ACCC and/or the CDPP. Indeed, the ACCC’s practice is to create its own records in respect of requests for markers and applications for immunity. In addition, the ACCC usually requires the immunity applicant to supply the primary documents relevant to the conduct in order to satisfy the cooperation requirement for conditional immunity; and

 

  • acknowledging (in its Interpretation Guidelines) that it will use its “best endeavours to protect any confi dential information provided by applicants for immunity”. The ACCC seeks to balance its freedom to make disclosures to other agencies (Australian and foreign) and its ability to assure immunity and leniency applicants that it can and will protect their information from access in private damages litigation. The CCA (section 155AAA) contains statutory protection of information provided to the ACCC in confi dence. More particularly, it prevents an ACCC offi cial from disclosing “protected information” (relevantly, information provided in confi dence to the ACCC and relating to a core statutory provision, including the cartel conduct prohibition provisions) except in limited circumstances. One such circumstance (provided for in section 155AAA(12)) is that the ACCC is permitted to disclose “protected information” to, relevantly, foreign government bodies (including overseas competition law regulators) where the Chairperson of the ACCC is satisfied that particular protected information will enable or assist that agency to perform/exercise its functions or powers. It is the ACCC’s practice to seek a substantive waiver from immunity applicants in order to share the information with overseas regulators.

In July 2009, the CCA was further amended to enhance the protection of “protected cartel information”. “Protected cartel information” is information provided to the ACCC in confidence relating to a breach or possible breach of the prohibitions on cartel conduct. (The definition arguably encompasses all information and documents provided confidentially to the ACCC in support of an application for immunity.) These provisions:

 

  • enable the ACCC to refuse a request for documents under section 157(1) of the CCA if the documents contain “protected cartel information”. This provision allows, relevantly, persons subject to civil penalty proceedings by the ACCC (i.e. co-conspirators of the immunity applicant who may be defending ACCC legal proceedings) to obtain copies of all documents the ACCC has in connection with the matter which tend to establish the person’s case, other than documents prepared by an offi cer of the ACCC or one of its professional advisers. The provision specifi es a non-exhaustive list of criteria to which the ACCC must have regard in refusing a request. A decision by the ACCC not to produce the documents may be appealed to the Federal Court of Australia;

 

  • protect the ACCC from being required to produce to a court or tribunal documents containing “protected cartel information” or to disclose “protected cartel information” except with the leave of the court (section 157B). In exercising its powers to grant leave, the court/tribunal must have regard to the following exhaustive factors:
    • the fact that the protected cartel information was given to the ACCC in confi dence;
    • Australia’s relations with other countries; and
    • the need to avoid disruption to national and international efforts relating to law enforcement, criminal intelligence and criminal investigations; and
  • where protected cartel information was given by an informant:
    • the protection or safety of the informant and persons associated with the informant;
    • the fact that production of a document containing, or disclosure of, protected cartel information may discourage informants from giving protected cartel information in the future;
    • in the case of a court – the interest of the administration of justice;
    • in the case of a tribunal – the interests of securing the effective performance of the tribunal’s functions; and
    • protect the ACCC from being required to make discovery or to produce to a person a document containing “protected cartel information” in connection with proceedings before a court to which the ACCC is not a party or in connection with prospective proceedings, however the ACCC may give that person a copy of a document containing protected cartel information (section 157C). Where the ACCC exercises this power it must have regard to a number of factors set out in the legislation.

 

The ACCC has a clear interest in preserving the integrity of its immunity policy and accordingly, potential immunity applicants should expect that the ACCC will continue to vigorously contest the disclosure of information provided to it in confi dence during cartel investigations and subsequent litigation proceedings. The receptiveness of the courts to such arguments is unpredictable. The courts have not yet considered, in a judgment, the provisions relating to “protected cartel information”. In a number of recent judgements considering conduct which preceded the introduction of the new provisions, the courts considered some of the factors set out in section 157B (see above) and demonstrated a willingness to allow disclosure of information and documents to third parties, including at an early stage of the enforcement proceedings. The Federal Court of Australia has, for example, rejected an argument that it is in the public interest to protect an informant from prosecution for cartel conduct in other jurisdictions.


The only other way for the ACCC to protect disclosure of information provided by an immunity applicant is through successful claims for legal professional privilege or public interest immunity. It is notable that in two recent decisions of the Federal Court of Australia (Cadbury Schweppes v Amcor and ACCC v Prysmian) the ACCC failed to prevent the disclosure of information on the basis of public interest immunity.


Where a third party obtains access to documents, it is subject to an implied undertaking which restricts the use that can be made of the document. Australian courts have affirmed the principle (known as the “implied undertaking”) that: “Where one party to a litigation is compelled, either by reason of a rule of court, or by reason of a specific order of the court, or otherwise, to disclose documents or information, the party obtaining the disclosure cannot, without the leave of the court, use it for any purpose other than that for which it was given unless it is received into evidence” (Hearne v Street). The implied undertaking also applies to overseas parties that have not submitted to the jurisdiction of the court in Australia, although there will be considerable practical problems of enforcing such an obligation against parties which may be disputing the jurisdiction of the Australian courts.


Administrative Settlement Of Cases


The Federal Court of Australia and the ACCC recognise that more lenient treatment should be afforded to those persons who cooperate with the ACCC in its investigations and in court proceedings. This is recognised through the ACCC’s Cooperation Policy. Pursuant to the Cooperation Policy, corporations and individuals are entitled to complete or partial immunity from actions taken by the ACCC or submissions to the court for a reduction in penalty or administrative settlement in lieu of litigation, in recognition of cooperation and assistance provided by cartel participants to resolve matters.


The Cooperation Policy (and the practice of the ACCC) does not provide for a fi xed (or typical) percentage reduction in penalty for cooperation. When preparing submissions on penalty, the ACCC considers each case on an individual basis. As a general principle, Australian law requires that there be some parity between the penalties imposed on persons who have engaged in substantially the same conduct. This, however, can be materially affected by the allowances made by the ACCC and the Federal Court of Australia for differing degrees of cooperation.


Importantly, however, the ACCC’s position is that it will not negotiate away criminality for higher civil penalties. That is, individuals are not permitted to trade-off a possible criminal prosecution with a civil settlement. The ACCC will therefore not engage in civil settlement discussions with cartel participants until it has formed a view as to the seriousness of the cartel conduct and determined not to refer the matter to the CDPP, or been advised by the CDPP that criminal prosecution should not be commenced.


Third Party Complaints


Third parties may approach the ACCC on a confidential basis to make a complaint about suspected cartel arrangements. There is, however, no obligation on the ACCC to initiate an investigation into an alleged infringement and there are no rights of appeal for a complainant in circumstances where the ACCC determines it will not pursue an investigation or will not commence proceedings following an investigation.

 

In circumstances where the ACCC does not pursue the complaint, a complainant may elect to commence a private action for damages in the Federal Court of Australia for loss or damage suffered as a result of the suspected cartel conduct.


The vexed issue of third party access to documents contained in the ACCC investigation file is discussed, in detail, above.


Civil Penalties And Sanctions


A corporation that contravenes the cartel conduct prohibition is subject to maximum pecuniary penalty per contravention, being the greater of:

 

  • $A10m;
  • three times the benefi t directly or indirectly obtained by the corporation and any related body corporate that is reasonably attributable to the contravention; or
  • if that benefi t cannot be determined, 10 per cent of the annual Australian turnover of the corporation and any related body corporate in the twelve months preceding the contravention.

An individual knowingly involved in a contravention of the civil cartel conduct prohibition is subject to a maximum pecuniary penalty of $A500,000 per contravention.


The likely amount of the penalty is a matter for submissions to the court following an infringement decision. Relevant factors to be considered in determining the penalty are discussed below. To date there has been little detailed consideration by the Federal Court of Australia of contested expert evidence on such issues as the amount of harm caused by the cartel conduct.


The ACCC may also apply to the court for a range of other orders including: disqualifying individuals from managing corporations; injunctions; community service; probation; and adverse publicity. Corporations are prohibited from indemnifying, directly or indirectly, officers, employees or agents against the legal costs of defending proceedings or financial penalties imposed by a court where the officer, employee or agent is found to have engaged in the prohibited cartel conduct.


Unless the court orders otherwise, the general rule in Australian civil litigation is that costs follow the event; that is, the unsuccessful party in the proceeding will be ordered to pay the successful party’s costs of the proceeding on the relevant court scale. Usually costs are quantified on a party and party (rather than an indemnity) basis.


The CCA empowers the court to impose pecuniary penalties in respect of each contravention of the CCA. The court has a broad discretion to determine the level of pecuniary penalty. The courts have developed a list of non-exhaustive factors to be considered in assessing the quantum of the penalty.


Those factors are:

 

  • the nature and extent of the contravening conduct;
  • the amount of loss or damage caused;
  • the circumstances in which the conduct took place;
  • the size of the contravening company;
  • the degree of power it has, as evidenced by its market share and ease of entry into the market;
  • the deliberateness of the contravention and the period over which it extended;
  • whether the contravention arose out of the conduct of senior management or at a lower level;
  • whether the company has a corporate culture conducive to compliance with the CCA;
  • whether the company has shown a disposition to cooperate with the authorities responsible for the enforcement of the CCA;
  • similar conduct in the past;
  • the financial position of the respondent; and
  • the deterrent effect of the proposed penalty.

In the Cargolux Airlines decision, the court noted that the ACCC had taken account of the fact that Cargolux expected very substantial penalties to be imposed on it in Europe and the USA at the conclusion of the EU and US investigations.


A cooperating party can negotiate an ‘agreed’ penalty with the ACCC where that party admits to the contravention. In this case, an agreed statement of facts and a joint submission on penalty can be submitted to the court. While the court retains discretion to impose a different penalty, it is the usual practice of the court to accept the agreed penalty where it is appropriate and within the range of what the court would otherwise impose, having applied the penalty factors set out above.


An appeal does not suspend a company’s requirement to pay a penalty, however, it is usual practice to seek an order from the court to stay the penalty until the appeal is heard.


Right Of Appeal Against Civil Liability And Penalties


An unsuccessful party has a right of appeal from civil or criminal proceedings from the initial decision of a single judge of the Federal Court of Australia to the Full Court of the Federal Court of Australia, comprising three judges. The appeal is by way of a re-hearing. Examination and cross-examination of witnesses takes place at the initial trial and not in appeal proceedings.


Further appeals are by leave to the High Court of Australia.


In the majority of cartel enforcement actions, the Federal Court of Australia will impose penalties and make orders for relief by consent of the parties to the proceeding. Accordingly, there are relatively few instances where a party will seek to appeal the decision of the Federal Court of Australia.


Criminal Sanctions


An individual knowingly involved in a breach of the criminal cartel conduct prohibitions is subject to a jail term of up to ten years per offence and a fi ne of up to $A340,000 per offence.


Parallel civil and criminal investigations are possible, however, the practice in Australia is that concurrent civil proceedings will be stayed where a criminal prosecution has been commenced. To date no court proceedings for criminal sanctions for cartel conduct have been commenced in Australia and, as a consequence, there is no guidance as to the key factors in conducting such proceedings. One aspect of the criminal proceedings which will be signifi cantly different from proceedings for a civil penalty is that the decisions on factual matters will be made by a jury.


A criminal conviction may also expose individuals and corporations to confiscation of assets under the Commonwealth Proceeds of Crime Act 2002 provisions.


Cross-Border Issues


Section 5 of the CCA confers extraterritorial operation by applying the CCA to conduct outside of Australia where the party engaged in the cartel conduct is:

 

  • an Australian citizen;
  • a person ordinarily resident in Australia; or
  • an Australian unincorporated entity or a body corporate carrying on business in Australia.

It is a question of fact whether a corporation is “carrying on business” in Australia, to be determined at the time the cartel conduct took place. If a foreign corporation operates through a subsidiary in Australia, it is necessary to determine whether the subsidiary is carrying on its own business, or that of the parent company.


The ACCC is an active member of the International Competition Network, and has entered into bilateral cooperation agreements in relation to cartel and competition law issues with various international antitrust enforcement agencies.


The ACCC has conducted many matters involving coordination of investigations and immunity applications with other overseas regulators. In some cases, the ACCC will rely on documents or information obtained from or provided by a foreign regulator in proceedings in the court (this was the case, for example, in the Marine Hose cartel matter, where the Federal Court of Australia imposed penalties exceeding $A8m).


There are a number of avenues for the ACCC to provide assistance to foreign regulators. Under section 155AAA of the CCA, the ACCC may provide a foreign government body with information that would enable/assist it to perform/exercise its functions. As a matter of course, the ACCC will seek waivers from immunity applicants to share information and documents with overseas regulators. Pursuant to the Mutual Assistance in Criminal Matters Act 1987, foreign countries can request that the Commonwealth attorney-general provide assistance in relation to criminal proceedings in that foreign country, including obtaining evidence.


Australia has also entered into a number of extradition treaties with other countries, including the USA.


Developments In Private Enforcement Of Antitrust Laws


A right of private action for damages resulting from a contravention of Australian competition law has existed since 1975, and there has been a class action mechanism in the Federal Court of Australia since 1992.


In early 2013, Norcast S.ár.L (Norcast) was awarded damages of US$22.4m against Bradken Limited (Bradken) for Bradken’s contravention of the CCA’s bid-rigging prohibition. The Court held that Bradken and another company, Castle Harlan, had entered into a bid-rigging arrangement whereby Castle Harlan would bid, and Bradken would not bid, to acquire shares in Norcast. The case is significant as it is the first decision regarding the bid-rigging cartel provisions of the CCA (introduced in 2009).


Moreover, in fi nding Bradken liable the Court found that it and Castle Harlan were “in competition” with one another for the acquisition of the Norcast shares, in circumstances where Bradken considered that it had been excluded from the bidding process and Castle Harlan would not have participated in the bidding process if not at the request of Bradken. This decision is the subject of appeal proceedings. Private damages claims, including class actions, for cartel conduct have become more prevalent since approximately 2000. Cases to date have clarifi ed aspects of the law, such as the extra-territorial application of the CCA, aspects of the proper definition of the “class”, and some aspects of access to documents held by the ACCC.


As noted above, however, the intersection of the ACCC’s immunity policy and the desire of private plaintiffs to have access to the ACCC’s “file” is a source of serious on-going friction.


Reform Proposals


The ACCC is currently undertaking a review of its cartel immunity policy. The review is aimed at examining ways that the ACCC may:

 

  • bolster the exposure of the cartel immunity policy to the general public;
  • improve the administration of the cartel immunity policy, in terms of the ACCC’s internal processes; and
  • make its guidance in relation to the immunity policy better and clearer.

As part of its review, the ACCC has engaged in targeted consultation with the legal community to ascertain its views regarding the immunity policy. The ACCC is planning to release a discussion paper in late 2013 inviting comment on specifi c proposals for changes to its immunity policy.

 

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For further information, please contact:

 

Peter Armitage, Partner, Ashurst

peter.armitage@ashurst.com

 

Melissa Fraser, Ashurst

melissa.fraser@ashurst.com

 

Ross Zaurrini, Partner, Ashurst

ross.zaurrini@ashurst.com

 

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