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Regulators around the world remain focused on the impact of cartels on business, and the Australian Competition and Consumer Commission (ACCC) is no exception. In 2013 the ACCC received 27 approaches in relation to cartels, resulting in 13 in-depth investigations. International cooperation in this area is increasing, due significantly to the work of the International Competition Network, the global organisation of competition regulators. 

It is essential that companies remain vigilant about competition compliance. Some recent cases, both in Australia and overseas, illustrate the importance of combating cartels and the role of effective immunity policies in helping to sustain a competitive business environment.

In May the ACCC successfully concluded non-criminal action against Japanese company, NSK Australia Pty Ltd in relation to a cartel to fix the price of automotive and industrial bearings, where senior company executives based in Australia had met regularly, normally over dinner, to discuss pricing plans with executives of two other bearings companies. In announcing the decision, the ACCC made the point that the cartel had been brought to the ACCC’s attention as a result of the US Department of Justice’s investigation into auto-parts cartels.

Other hard-fought cartel cases in Australia involving air cargo, travel agency services and bank mortgage brokerage remain before the courts. Two of those cases involve complex questions relating to the application of anti-cartel laws to agency relationships and internet selling.

In the latest move, the ACCC has instituted Federal Court proceedings in two less common types of cartel cases. In the first the ACCC has moved against Colgate-Palmolive Pty Ltd and PZ Cussons Australia Pty Ltd alleging that they entered into arrangements to cease supplying standard concentrate laundry detergents and supply only ultra concentrates, and, not passing on cost savings to consumers. 

In the other case, against the Australian Egg Corporation, two egg producers and a number of executives,

allege that they had attempted, unsuccessfully, to induce egg producers who were members of corporation to cull hens or otherwise dispose of eggs to reduce the amount of eggs available for supply in Australia.

This pattern reflects activities overseas. In Japan just recently for example, more than 60 companies have been fined for allegedly fixing the price of corrugated cardboard, and South Korea's competition agency recently fined six construction firms for bid-rigging. Regulators in countries large and small are taking action. For example, in Mauritius the Competition Commission has recommended imposing fines on two beer companies involved in a cartel case that, according to Global Competition Review, was the first in that country to be made public. The case resulted from a leniency application.

According to competition agencies around the world, effective immunity policies are the single most effective weapon in combating cartel conduct. Back in Australia, the ACCC has taken steps to revise its immunity policy in order to increase the level of disclosure in relation to cartels. The ACCC aims to streamline the processes for granting civil and criminal cartel immunity, clarify the criteria for assessing eligibility for immunity and provide information on how cooperation by second and subsequent parties to a cartel will be assessed.

No doubt this will result in even more immunity applications and even more cartel investigations by the ACCC. So, what action should be taken by corporate counsel? 

• refresh the Board's or chief executive's commitment to competition compliance and make sure it is well understood throughout the corporation

• continually update and provide compliance training, especially for new executives and especially in the marketing or sales areas

• ensure that the corporation has an effective process for executives who have questions or concerns about compliance to raise them and have them dealt with effectively

• establish a specialist panel of 'go to' competition lawyers who can take necessary when the need arises – seeking a marker, assessing the situation and steering the matter through the ACCC process.

For international corporate counsel and outside counsel alike, recognise that the ACCC is well connected internationally, that there is always a rush to seek a marker in Australia and that prompt investigation and assessment of possible cartel activity is a necessity,  

Having an effective competition team on hand in Australia to swing into action when needed is wise. 

 

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