On 5 June , the Australian Competition and Consumer Commission (ACCC) confirmed the Commonwealth Director of Public Prosecutions would lay criminal charges against the ANZ, Citigroup and Deutsche Bank over alleged cartel conduct.
The charges come after a two-year ACCC investigation into a $2.5 billion ANZ institutional share placement in 2015.
Criminal charges have also been laid against senior bank executives John McLean, Itay Tuchman and Stephen Roberts of Citigroup; Michael Ormaechea and Michael Richardson formerly of Deutsche Bank; and Rick Moscati of ANZ.
The matter will first go before the courts next week on 3 July. A potential civil case against the banks is also being pursued by the Australian Securities and Investments Commission.
The Australian Financial Review reported JP Morgan blew the whistle on the arrangement in 2015. Under the ‘ACCC immunity and cooperation policy for cartel conduct’, parties may seek civil or criminal immunity in exchange for “a detailed description of the cartel conduct”.
The policy states: “International experience and the experience of the ACCC has demonstrated that effective immunity and cooperation policies encourage businesses and individuals to disclose cartel behaviour and this in turn assists the ACCC to stop the harm arising from this illegal conduct and to take action against participants.”
Top priority for the watchdog
Cartel prosecutions are one of the ACCC’s priority areas for 2018.
ACCC chair Rod Sims has warned that the commission has a substantial team of specialist criminal cartel investigators and now has a strong capacity to conduct careful and thorough criminal investigations.
The ACCC is pushing harder for fines for anti-competitive behaviour and false, misleading or deceptive conduct – and companies with a turnover of a billion dollars or more are in the spotlight.
For corporations, the maximum fine or pecuniary penalty for a criminal cartel offence or civil contravention will be $10 million or three times the value of the benefits obtained, or 10 per cent of the annual turnover of the company (including related corporate bodies) in the preceding 12 months.
Individuals found guilty of cartel conduct could face up to 10 years in jail and/or fines of up to $420,000 for a criminal cartel offence, or a pecuniary penalty of up to $500,000 for a civil contravention.
ACCC Chair Rod Sims says the organisation is spending a lot of time educating large and small businesses on compliance.
“We have a lot of interaction at the big end of town with all the main law firms and their clients. Over the course of a year, I'm probably engaging with the legal counsel of most firms in the country,” said Sims.
Sims adds the Commission works hard to educate and engage with smaller firms on their legal rights and obligations.
“We have a lot of engagement with smaller businesses, both to let them know what they need to comply with, but also what their rights are...and how the law can protect them.”
Notable cartel case files
Visy and Amcor controlled around 90 per cent of the corrugated fibre packaging market, which was worth some $1.8 billion to $2 billion per year. From 2000 to 2004, the two companies conspired to raise the prices of their products while maintaining their respective market shares. Amcor reported the conduct to the ACCC and was granted immunity from prosecution. Visy was fined $36 million by the Federal Court and individual fines totalled $2 million. The Court ordered Visy and Amcor to pay $95 million in damages to a customer class action involving more than 4500 businesses who were overcharged by the cartel.
Car parts supplier Yazaki Corporation was fined $9.5m in May 2017 for collusion with a competitor. The ACCC appealed and in April 2018, the Full Federal Court increased the fine to $46m.
August 2017 saw the first conviction under Australia’s criminal cartel laws, when Nippon Yusen Kabushiki Kaisha was fined $25m in relation to the transportation of motor vehicles to Australia between 2009–12. A second company, K Line, pleaded guilty in April 2018.
In April 2018, Flight Centre was fined $12.5m by the Federal Court for attempting to induce three international airlines to enter into price-fixing arrangements between 2005–2009.
In 2016, Reckitt Benckiser was convicted of misleading or deceptive conduct. On appeal from the ACCC, the Full Federal Court increased the fine from $1.7m to $6m.
Coles Supermarkets was fined $10m by the Federal Court in late 2014 over unconscionable conduct towards some of its suppliers in 2011, demanding fee payments and denying access to essential information.
Pecuniary Penalties for Competition Law Infringements in Australia 2018