Published: 29 August 2012
Summary: Featuring ACCC Chairman Rod Sims, University of Melbourne Associate Professor Caron Beaton-Wells, and Qantas CEO Alan Joyce, this video news release includes interview and overlay footage as well as the trailer for use by media outlets.
INTERVIEWER: Why is the ACCC telling businesses to stay out of cartels?
ACCC CHAIRMAN ROD SIMS: It’s come to our attention that the level of awareness about cartels amongst Australian businesses is not as it should be. Some companies are very familiar with the term they understand what it means in terms of price fixing or bid rigging, other companies do not. Indeed there was one survey that found that while a number of people were aware of cartel activity and that it was illegal 1 in 10 of those people felt that they might still participate in a cartel.
That’s why I’m sending a letter and a copy of our new short film ‘The Marker’ which shows the devastating effect that cartel conduct has on individuals and businesses. I’m going to send this to the CEOs at 300 of Australia’s largest companies. We’re going to distribute this material extremely widely. We’re going to use social media, we’re going to use conventional media, we’re going to work with industry bodies and professional associations so one way or another our aim is to get this message out to every business in Australia.
I’m urging CEOs to take steps to ensure that all their employees understand what constitutes cartel activity and the very serious consequences they face if they make under the table deals with their competitors.
INTERVIEWER: Why are cartels illegal and what are the penalties?
ACCC CHAIRMAN ROD SIMS: Cartels occur when businesses make agreements with their competitors to fix prices, rig bids, share markets or limit supply in order to maintain or increase profits. Businesses and individuals who enter into cartel arrangements with competitors are breaking the law. When businesses cheat by forming cartels they damage the economy, force other competitors and clients out of business and rip off consumers. Now, there is no excuse for this deceptive and dishonest conduct including in hard economic times when some businesses may be struggling to survive.
For each offence or contravention companies face penalties of the greater of $10 million or 3 times the benefit gained from the conduct or where this cannot be determined 10% of annual turnover of the company or corporate group. Individuals can face hefty fines, a criminal record and up to 10 years in jail.
INTERVIEWER: How does your immunity program work?
ACCC CHAIRMAN ROD SIMS: Anyone currently or recently involved in cartel activity should be the first to apply for immunity. As long as you are not the clear cartel leader and have not coerced others into a cartel any business or person can apply to the ACCC for immunity from prosecution in exchange for helping us with our investigations. I would say to any business or individual involved in cartel activity that they should get in contact with the ACCC to get an immunity marker in place. While ever they don’t they’re running a risk that someone else involved in the cartel will do that and if someone gets in before them then they face serious prosecution and frankly not only a jail term but a potential destruction of their life.
Now, there is no honour amongst thieves so the sooner cartel members contact us for an immunity marker the safer they will be. For details about cartels and how to obtain immunity go to the ACCC website or call the immunity hotline.
INTERVIEWER: What do you think of cartels?
QANTAS CEO ALAN JOYCE: As a business leader I take flouting cartel laws very seriously cartels have no place in the legitimate business world. With Qantas and some of its executives having been through the rigours of an investigation and prosecution there’s no question that participating in cartel activities is a very bad personal and business decision.
Qantas freight division participated in a global price fixing cartel in the early 2000’s which once investigated and prosecuted by global anti-trust regulators cost Qantas more than 200 million in fines and settlements.
The executives who agreed to participate in that cartel conduct believed they were acting in the best interests of Qantas freight in fact they broke the law and cost Qantas substantially more than was earned by the illegal conduct. In addition one Qantas freight executive in the United States was convicted and spent 6 months in prison.
INTERVIEWER: What advice would you give businesses about avoiding cartel conduct?
QANTAS CEO ALAN JOYCE: It is critical that all companies set up a thorough training and compliance program to avoid breaking cartel laws and that this compliance program is supported at the highest levels in the company. It is also critical that you establish and support a whistle blower program so that employees concerned about conduct in your company can raise their concerns for investigation at the appropriate level.
Well, I urge all CEOs and their executives to show this film to everyone at every level of your business who could be involved with competitors. As we see through the experience of the characters of this film, being involved in a cartel is a serious issue that can cost you your business, your reputation, enormous financial losses, your family and friends and ultimately your freedom.
INTERVIEWER: What did the 2010 University of Melbourne research into cartels show?
ASSOCIATE PROFESSOR CARON BEATON-WELLS, UNIVERSITY OF MELBOURNE: 58% of business people don’t know that cartel conduct is a criminal offence and 37% either think it is legal or are unsure as to whether it is against the law. Only 45% of business people know that cartel conduct attracts a fine and only 23% know that it attracts a potential jail sentence.
While many business people know that cartel conduct is illegal there’s significant variation in the way in which they respond to that understanding. Many just don’t take the message seriously or if they’re caught they don’t think they’ll face legal action including a potential jail term if found guilty. Even knowing what the legal consequences would be 1 in 10 business people would still take the opportunity to engage in cartel conduct.
The law has been clear and it has been enforced vigorously by the ACCC for more than 30 years. We did expect a higher level of awareness than we found and certainly we didn’t expect the apparent readiness on the part of the some members of the business community to openly flout the law.
INTERVIEWER: What is the best way to spread the message to businesses?
ASSOCIATE PROFESSOR CARON BEATON-WELLS, UNIVERSITY OF MELBOURNE: It seems to me that the ACCC has to try different forms of media in order to get this message across. Simply having the results of cases published in news releases and reported through the financial press is not necessarily the most effective way to get this message into parts of the business community.
I see it as a really important part of the ACCC’s role to educate members of the business community about the law and the sanctions that apply to this serious type of anti-competitive conduct.
PART FOUR -THE MARKER - TRAILER
MARTIN: It’s been going on so long now that it’s just the way things are done.
GORDON: Oh, Neil’s replacement?
MARTIN: Give me a couple of weeks to get up to speed.
FIONA: No time for that I’m afraid.
MARTIN: Ah, I’m shattered.
GORDON: You can take the money and go run a company or stay here and help run an industry.
MARTIN: I just have to rock up, polish it and take the cash.
JEFF: Sounds perfect.
MARTIN: The tenders get rotated around.
FIONA: Congratulations, we got the tender.
MARTIN: Someone new starts up that doesn’t want to play ball then we just...
GORDON /MARTIN: Price them out.
JEFF: Don’t feel guilty. They have to catch you first.
GORDON: Everybody needs to understand that this is how things operate.
MARTIN: Is anything wrong?
JEFF: You’ve got a bit of price fixing, some government tender rigging and dividing up of territories.
GORDON: No mate, nothing’s wrong.
JEFF: It sounds like you’re running a cartel.
FIONA: We need you to do your job.
LUCY: Who are you calling?
MARTIN: What’s it to you?
FIONA: What’s gotten into you Martin?
News report on Radio: The competition watch dog has new teeth to crack down on price fixing.
JEFF: You need help. You need to talk to someone, someone who knows about this stuff.