Serious cartel conduct will after July 24 be viewed by the Australian Competition and Consumer Commission as criminal and will consequently expose company executives to gaol terms of up to 10 years.
This warning was delivered today by the chairman of the ACCC, Graeme Samuel, in addressing a meeting of the American Chamber of Commerce in Sydney.
"In the case of serious cartel activity, no matter how fat your cheque book, nor to what lengths a corporation will go to defend the position of its executives, there is no amount of money that will remove the risk of you going to gaol," Mr Samuel said.
"A criminal cartel prosecution will not be negotiable – you will not be able to buy your way out of a criminal conviction and gaol."
Mr Samuel said lawyers should not concern themselves with trying to second-guess the line between the possibility of a gaol term or civil penalty.
"They should simply advise their clients not to participate in any cartel. You do not fix prices, you do not rig bids, you do not allocate customers. This is the kind of conduct which could expose your client to gaol. The ACCC will use the full force of the law to bring you to account, either financially or through incarceration."
While cartel activity has been outlawed for more than 30 years, for the first time there will be an additional sanctions of criminal conviction and gaol under amendments that become law on July 24.
"In terms of penalties for participation in cartels, Australia has been seen as the soft underbelly in international cartel operations," Mr Samuel said.
"In relation to immunity and investigation, cartel participants placed dealing with Australian regulators as a second-order priority. Internationally you face gaol for involvement in a cartel. In Australia, you can simply use part of the money you have stolen to pay a fine – and keep the rest!"
Under the new law, serious offenders would be gaoled and, in addition, potentially face a fine, be banned from being a company director or company manager for life.
Furthermore, a business could be subject to fines of up to $10 million, or three times gain, or 10 per cent group turnover – whichever was the highest.
Mr Samuel said in deciding whether a matter was serious and should be referred to the Commonwealth Director of Public Prosecutions, the ACCC would consider factors including:
- whether the conduct was longstanding
- the impact of the conduct – did it or would it have a substantial impact on the market?
- detriment – did it or would it have created a substantial detriment to consumers?
- past history – do the alleged participants have a history of participating in cartel conduct? And
- the size of the cartel – did it affect more than $1 million of bids or commence within a 12 month period?