Criminal sanctions 'raise bar' for ACCC investigations

The introduction of criminal sanctions for cartel conduct will raise the bar for Australian Competition and Consumer Commission investigations, ACCC Chairman, Mr Graeme Samuel, said today.*

The Immunity Policy, the development of a Memorandum of Understanding with the Director of Public Prosecutions, enhanced training of ACCC staff in a dedicated criminal enforcement and cartel branch, and a campaign to raise awareness of cartels amongst government procurement officials were some of the steps already under way to ensure the agency was equipped to undertake its new role.

"Investigations into cartels are some of the most complex and difficult investigations that the ACCC undertakes", he said. "Proving a criminal cartel offence will take that difficulty to a new level. The inherently secretive nature of cartels and the measures taken to avoid detection often necessitate time consuming and resource intensive investigations.

"The ACCC gathers information from a wide range of sources.  In a typical investigation, the ACCC will usually gather information about communications between competitors (for example, by analysing telephone records and emails). An example from one recent case that illustrates how resource intensive a cartel investigation may be is that the ACCC analysed more than 20 archive boxes of telephone call records. This revealed more than 1600 calls between competitors". 

Mr Samuel said another important task for ACCC investigators would usually be to fully review pricing information with a view to establishing any correlation between pricing movements and communications between competitors. 

"The ACCC is also likely to interview a wide range of people including customers, suppliers and industry bodies. Some interviews will be less formal, but others will involve the use of the ACCC's coercive powers under section 155. In this case, interviewees will usually be represented – which again raises the level of complexity of an investigation".

Mr Samuel said that one misconception about immunity was that one application would 'stitch-up' the other cartel participants and deliver the ACCC a successful case.

"The immunity applicant's information is usually very useful, but it is only the beginning of an investigation to find sufficient evidence to litigate successfully.

"Unlike in some jurisdictions, the success or otherwise of an immunity application is not dependent upon the quality or value of the evidence provided by the applicant. That said, the immunity policy is a great tool to break open cartels. It certainly helps the ACCC obtain evidence, but it is only one component of a cartel investigation.

"While it is not unheard of for an immunity applicant to supply a 'smoking gun document', it is more usual that the ACCC receives a 'road map' of the cartel.  It will always be necessary for the ACCC to investigate the admissions from other sources to validate the information provided and prove our case.  Exactly what investigative steps are required will vary from case to case".

Mr Samuel said it should be remembered that Immunity Policy, as its title suggested, granted immunity from prosecution to a person who has confessed to the ACCC on his/her involvement in a cartel and therefore a breach of a serious provision of the Act.

"In the absence of immunity they would be prosecuted and liable to substantial financial penalties and in the near future jail sentences. Under the Immunity Policy they will get off scot-free. The Immunity Policy recognises that there is a benefit in busting secret cartels if participants are given an incentive to confess and co-operate with ACCC efforts to investigate and prosecute".

Mr Samuel said that the introduction of jail sentences for executives involved in cartel behaviour would, he hoped, "prey on the minds of Australian company executives" considering breaching the Trade Practices Act 1974.

*Mr Samuel was addressing the Economics Society of Australia's Detection of cartels symposium in Melbourne.