The Australian Competition and Consumer Commission today issued a leniency policy aimed at exposing and stopping secret corporate cartels operating in Australia.
The policy will come into force as of 9 a.m. on Monday 30 June 2003.
The policy encourages corporations and their executives to reveal the most serious and collusive contraventions of competition law such as price-fixing, bid-rigging and market sharing.
"The policy makes corporate lawbreakers and their executives an offer they should not refuse - cease the illegal conduct and report it to the ACCC in return for a clear, transparent and certain offer of leniency", ACCC Chairman, Professor Allan Fels, said today.
“But there is an important catch. The policy only applies to the first cooperative company or executive to come forward. The others will be exposed, investigated and where the evidence permits, brought before the courts.
"The corporate lawbreakers must now ask themselves – 'can I really trust my competitors?'".
The key principles of the policy are:
- where the ACCC is unaware of a cartel, the first person (company or individual) to come forward will receive an offer of conditional 'immunity' from ACCC-instituted court proceedings
- where the ACCC is aware of a cartel but has insufficient evidence to institute court proceedings, the first person (company or individual) to come forward will receive an offer of conditional 'immunity' from pecuniary penalty.
The policy was prepared with reference to leniency policies that have been successfully used internationally to break cartels such as in the United Kingdom, the United States of America, Canada and the European Commission. The ACCC has introduced the policy following an extensive period of public consultation on a draft version that was released in July last year. It will now operate in conjunction with the existing ACCC cooperation policy in enforcement matters.
"Hard core cartels are the very worst violations of competition law. They always hurt consumers and businesses by artificially inflating the price of goods and services. They also act like a dead weight upon the economy by preventing innovation, reducing the competitiveness of Australian industries, limiting employment opportunities and stunting economic growth.
"For this reason, detecting, stopping and deterring the domestic and international hard core cartels that operate covertly in Australia continues to be one of the very top priorities for the ACCC. In recent years the ACCC has successfully broken major cartels in industries such as vitamins, concrete, freight, fire protection, transformers and many others.* In these cases the ACCC has brought numerous executives and their companies before the courts, where they have faced multi-million dollar penalties.
"The ACCC's very important enforcement work to crack cartels will continue".
Under the existing civil penalty regime corporations involved in cartels face pecuniary penalties of up to $10 million per contravention, whilst their executives face penalties of up to $500,000 per contravention. The recent review of the competition provisions of the Trade Practices Act 1974 (Dawson Review) concluded that criminal sanctions, including the possibility of jail terms for executives and bigger fines, should be introduced to deter the most serious hard core cartels. It also concluded that an effective leniency policy would be a potent means of uncovering cartel behaviour.
"The ACCC supports these conclusions of the Dawson Review. However, it is important to note that this leniency policy will only apply to the existing civil penalty regime. If the law is ultimately reformed to introduce criminal sanctions for hard-core cartels, the ACCC will need to reconsider this policy in light of those changes. The ACCC will liaise with the DPP and Commonwealth Attorney-General regarding a leniency policy for any criminal offences for hard-core cartels.
"The ACCC will conduct a review of the value of this leniency policy at an appropriate time in the future".