Illegal cartel conduct between competitors can take a variety of forms, including secret deals to fix prices, rig bids, allocate customers, share markets or limit production to drive up prices.
The Organisation for Economic Co-operation and Development (OECD) has noted that the price overcharge incurred by cartel behaviour is probably in the 20 to 30 per cent range with higher overcharges for international cartels.
Historical studies of cartels detected throughout the world indicate that cartel conduct affects many industries. Significant cartel conduct has been encountered overseas in the following industries:
construction
electrical products
milk
vitamins
chemicals.
One particular area identified by the OECD as offering potential allies to assist competition regulators to combat illegal cartel conduct is public and private procurement involving tendering activities. Procurement officials usually have sound knowledge of the particular industry that they invite to tender for large-scale contracts. These officials can identify the warning signs that indicate possible cartel conduct. While not overlooking the fact that the warning signs listed below may have a legitimate explanation, the signs include:
the procurement official becomes aware that suppliers are meeting before submitting tenders
tenders are much higher than expected
suppliers that would normally tender do not do so
the same supplier is often the lowest tender
prices drop when a new supplier tenders
the successful tenderer subcontracts work to a competitor who submitted a higher tender
the tenders are similar to the extent that they have the same spelling errors and miscalculations.
The ACCC has revised and reissued its procurement CD, Cartel conduct: warning signs during the procurement process, which is available free of charge. You can download a transcript of the cartel procurement CD from the ACCC website. Free copies of the CD are also available.
ACCC submission to Productivity Commission inquiry into consumer policy framework
In May the Australian Competition and Consumer Commission lodged its submission to the Productivity Commission's inquiry into Australia's consumer policy framework.
The ACCC's submission provides an overview of the Trade Practices Act 1974 and its role in fair trading and consumer protection law. The submission makes a number of recommendations about how the laws could be improved, including:
the introduction of civil pecuniary penalties and banning orders for breaches of the consumer protection and fair trading provisions of the Trade Practices Act
amendments to the Act to reduce administrative burdens associated with obtaining redress for consumers
enhancing the ACCC's investigative tools, in particular by enabling it to issue notices to traders requiring them to provide substantiation of advertising claims and allowing it to use its existing s. 155 investigation and evidence-gathering powers in certain circumstances
development of uniform consumer protection and fair trading laws across states, territories and the Australian Government and improving the level of cooperation between Commonwealth, state and territory agencies in administering those laws.
A copy of the ACCC’s submission can be found here.
First meeting of ACCC Health Sector Consultative Committee
The first meeting of the ACCC's newest consultative committee, the Health Sector Consultative Committee (HSCC), was held in Canberra on 29 May. The committee was formed to build on the improved dialogue between the medical profession and the ACCC that developed out of the work of the Health Sector Advisory Committee.
HSCC members represent a broad range of health and medical professionals, government and consumer health interests. The biannual meetings of the committee will provide a forum for the ACCC to hear first-hand about the trade practices issues that most affect the health sector, as well as any concerns held by members. The members will also be well placed to assist the ACCC in its creation of educational initiatives to assist the health sector in compliance with the Act.
