On 3 October 2003, the Australian Government announced the establishme…

On 3 October 2003, the Australian Government announced the establishment of a working party to consider whether appropriate criminal offences for cartel behaviour can be introduced into Australian competition law.

This followed the Australian Government’s announcement, in April 2003, in principle acceptance of the Dawson Committee’s recommendations to increase civil penalties for contraventions of Australian competition laws and introduce criminal penalties for serious hard core cartel behaviour. At the same time, the Australian Competition & Consumer Commission (ACCC) has stated that “detecting, stopping and deterring the domestic and international hard core cartels that operate covertly in Australia” will remain one of its top priorities.

The Dawson Committee noted that the Organisation for Economic Co-operation and Development (OECD) defines hard-core cartel activity as “anti-competitive agreements, concerted practices, or arrangements by competitors to fix prices, make rigged bids (collusive tenders), establish output restrictions or quotas, or share or divide markets by allocating customers, suppliers, territories, or lines of commerce”.

“The Federal Government’s announcement of a Working Group to examine the introduction of criminal offences for cartel behaviour into Australian competition law (the Trace Practices Act) is a sensible approach and is to be commended,” said Dave Poddar, partner in the Competition Law Group at Mallesons Stephen Jaques.

“Hard core cartel behaviour involves a loss to Australian consumers, but if it is to involve possible jail terms for Australian citizens, it is also very important to define properly the precise criminal conduct.

“The OECD definition of hard core cartels is very wide reaching and it also prohibits conduct that is currently capable of authorisation under the TPA. What constitutes so-called “hard core cartel behaviour” is not so clear cut. The OECD definition also potentially covers conduct such as collective bargaining notifications that the Dawson Committee recommended be considered for small businesses.”

Mr Poddar commented that consideration of criminal offences for cartel(s) is a sensible step forward and, coupled with an appropriate leniency policy, should add to the effectiveness of the ACCC in dealing with international cartels.

“Introducing criminal penalties for hard core cartel conduct will bring Australia into line with other countries. However, the implementation of overseas principles must be done in a considered way, to recognise the architecture and principles of Australian competition laws and protect the rights of individual Australian citizens and businesses. In this way, in the face of possible criminal penalties and jail terms, they can readily understand what can be difficult economic and legal principles.”

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