Australia: Overview

In summary

This chapter provides a summary of recent developments in Australian competition law and Australian Competition and Consumer Commission (ACCC) areas of focus for 2021. It also provides an overview of the key elements of Australian competition law, including the prohibitions on cartel conduct, misuse of market power and anticompetitive vertical arrangements as well as merger clearance processes and enforcement powers.

Discussion points

  • The ACCC’s response to the onset of the covid-19 pandemic, implementation of recommendations from the 2019 digital platforms inquiry and continued progress on a number of high-profile criminal cartel prosecutions;
  • digital markets remaining a key ACCC focus, with ongoing inquiries into digital advertising services and digital platform services;
  • likely developments in relation to the prosecution of criminal cartels, with a number of high-profile cases currently proceeding; and
  • the ACCC being likely to focus enforcement on the recently introduced ‘Big Stick’ energy laws.

Referenced in this article

  • The ACCC;
  • Competition and Consumer Act 2010 (Cth) (CCA);
  • Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020;
  • Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Act 2019 (Cth);
  • Federal Court of Australia; and
  • Australian Competition Tribunal.

During 2020, the ACCC was active across a broad range of competition and consumer law matters, including significant involvement in covid-19 pandemic response measures.

The ACCC continued to take an aggressive enforcement stance, including, in particular, in regard to cartel investigations with a number of high-profile criminal cartel matters continuing to proceed through the courts.

From the outset of the pandemic, the ACCC dedicated significant resources to the covid-19 pandemic response. From a competition law perspective, this primarily involved the granting of a number of urgent authorisation decisions, which facilitated cooperation between businesses to respond to market disruptions and supply chain challenges arising from the pandemic.

The ACCC has also continued to take an active role in considering market structure and potential reforms. Most significantly, in response to a direction from the Commonwealth Government, the ACCC developed a mandatory media code, which the government has recently passed into law. This code will require certain digital platforms to pay media companies for media related links appearing on their platforms. The ACCC has also flagged a number of areas for potential law reform, including in relation to the test applied to merger clearance.

Areas of focus in 2021

In February 2021, the ACCC announced its enforcement priorities for the upcoming year. Pandemic-affected markets will remain a focus for the ACCC, with the ACCC announcing competition and consumer issues relating to travel remaining a key focus. It will also continue its focus on digital platforms and technology in 2021, following the publication of the final report of its 2019 digital platforms inquiry, and the launch of further investigations into digital advertising and app markets in 2020 as well as the recently implemented news media and digital platforms mandatory bargaining code (discussed in detail below).

The ACCC will also continue to focus on cartels, anticompetitive agreements and unilateral conduct such as misuse of market power. Chair Rod Sims has predicted an increase in competition and cartel proceedings, including across the financial services sector. This follows the ACCC’s criminal cartel case against Citigroup, DeutscheBank and ANZ, and several senior executives, with the trial currently expected to begin in 2022.

The ACCC is also prioritising enforcement relating to competition and consumer issues arising from the pricing and selling of essential services, with a focus on energy and telecommunications. This follows the recently implemented Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Act 2019 (the Big Stick legislation), which came into effect in June 2020. This legislation inserted a number of prohibitions relating to conduct that, if engaged in by participants in electricity markets, could be detrimental to competition or to consumer welfare. Such conduct includes, for instance, the failure by a retailer to make reasonable adjustments to prices to reflect sustained and substantial reductions in its underlying costs of procuring electricity. In addition, certain conduct in hedging markets and wholesale markets is also prohibited. Mr Sims has recently stated that the ACCC is investigating two energy companies in relation to potential contraventions of these new prohibitions.

Amendments to the CCA

Legislative changes in respect of competition and consumer law included:

  • On 1 July 2020, the Consumer Data Right, which gives consumers the right to access data about them held by businesses, and direct this information to be transferred to trusted third parties of their choice, began to apply to the banking sector. The Consumer Data Right will be rolled out sector by sector, with banking being followed by energy and telecommunications.
  • As noted above, from 10 June 2020, the Big Stick legislation became effective. The Big Stick legislation, set out in Part XICA of the CCA, creates three new electricity sector-specific prohibitions on certain conduct in electricity markets and a number of new remedies that the ACCC can pursue in the event of breaches.
  • During 2020, the government amended the monetary threshold for the definition of ‘consumer’ under the Australian Consumer Law (with respect to acquiring goods only), which will increase from A$40,000 to A$100,000. This change has significantly increased the number of transactions to which relevant consumer protections will apply.

ACCC focus on digital platforms

At the conclusion of its digital platforms inquiry in June 2019, the ACCC recommended a number of measures, both legislative and otherwise, that would impact operators of digital platforms.

In terms of competition law, the ACCC recommended that there be amendments to Section 50 of the CCA (the merger control provision) including additional factors that should be taken into account in assessing whether a merger has the effect, or likely effect, of substantially lessening competition. These amendments of general application would include considering the likelihood that the acquisition would remove potential competitors from the market and a consideration of the nature and significance of assets being acquired. The ACCC also recommended that large digital platforms provide the ACCC with advanced notice of proposed acquisitions, effectively changing Australia’s voluntary merger notification regime into a compulsory regime for certain market participants.

The government provided its response to the digital platform inquiry on 12 December 2019. As part of its response, the government indicated an intention to consult on amendments to Section 50 of the CCA and has recommended a voluntary notification protocol be developed for large digital platforms. No relevant amendments have been made to the CCA to implement these recommendations. However, in November 2020, the ACCC chair indicated that the ACCC would put forward proposed amendments to Australia’s merger laws in 2021.

In February 2020, the ACCC launched two further inquiries in the digital sector, including the digital platforms services inquiry and the digital advertising services (ad tech) inquiry to investigate app markets and digital advertising. The digital platform services inquiry will run until 2025, with periodic reports on particular issues. On 23 October 2020, the ACCC released its first interim report, which primarily focused on online private messaging services in Australia. The ACCC’s next interim report, which is considering mobile app marketplaces is due to be published in March 2021.

The interim ad tech report was released by the ACCC on 28 January 2021, with a final report due in August 2021.

In April 2020, consistent with a recommendation in the 2019 digital platforms inquiry, the government asked the ACCC to develop a code of conduct to address alleged bargaining power imbalances between Australian news media businesses and digital platforms. After a period of development and consultation,and following significant debate, the Commonwealth Government has recently passed the Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020. The code, once implemented, will oblige certain digital platforms to pay media companies for media related links appearing on their platforms. This would be subject to binding (baseball) arbitration if parties cannot agree on relevant terms.

Pandemic response

There were two main ways in which the ACCC responded to the onset of the covid-19 pandemic.

First, the covid-19 pandemic resulted in a rush of applications for authorisation of coordination between competitors that might otherwise have contravened provisions of the CCA. Many of these applications were for the purposes of facilitating the supply of essential products (eg, medical supplies and groceries) or consumer and business relief, such as government relief packages. Other authorisations were granted to allow for coordination between businesses for the purpose of maintaining their commercial viability, thus ensuring that competition will be maintained in post-pandemic markets (eg, regional aviation). Recognising the exceptional nature of such authorisations, the ACCC chair was quoted as saying ‘at a time of crisis such as in war or with a pandemic, where there is a common enemy to fight for the nation’s survival, and so a sense of national purpose, coordination is both efficient and carries little or no downside’.

Second, the ACCC adjusted its 2020 enforcement priorities to focus on consumer protection and harm arising as a result of the pandemic. In particular, the ACCC stated that it would focus its enforcement activities on any business that sought to exploit the crisis to unduly enhance its commercial position or harm consumers. The ACCC’s initial focus was in relation to concerns relating to price gouging (noting that Australian competition law does not contain an explicit prohibition on excessive pricing). The ACCC indicated it would closely monitor representations made by businesses in relation to price increases for potentially misleading or deceptive conduct contrary to consumer law, and would consider whether extreme price rises for essential products could amount to prohibited unconscionable conduct.

Mergers

The principal form of merger clearance in Australia is informal clearance, an administrative process whereby merger parties consult with the ACCC on whether the proposed acquisition is likely to have the effect of substantially lessening competition. The 2017 amendments to the CCA resulted in a fusion of what was an unused formal merger clearance process administered by the ACCC and a separate merger authorisation process before the Australian Competition Tribunal. Under the new regime, formal merger clearance and merger authorisation are considered in the first instance by the ACCC under a single process.

The legal prohibition

The CCA prohibits mergers and acquisitions that have the effect or likely effect of substantially lessening competition in any market in Australia.

The prohibition applies to direct and indirect acquisitions of shares or assets. Accordingly, the acquisition of a controlling interest or of a minority shareholding that does not confer control may be sufficient to attract competition law review. The ACCC Merger Guidelines encourage merger parties to notify the ACCC well in advance of completing a merger where:

  • the products of the merger parties are either substitutes or complements; and
  • the merged firm would have a post-merger market share of greater than 20 per cent in the relevant markets.

The ACCC does not have direct power to prevent a merger and instead must take enforcement action in the Federal Court. Where the ACCC considers that an acquisition contravenes the CCA, it can apply to the Federal Court for an injunction, divestiture orders and penalties. Third parties, although they cannot apply for injunctions preventing a transaction, can apply for declarations and divestiture orders (including setting aside the acquisition in certain cases).

As noted above, there is no mandatory requirement to notify the ACCC about a proposed merger or acquisition. However, because of the risk that the ACCC may take enforcement action, merging parties generally seek ACCC clearance where there is a potential that the merger raises competition law concerns. Even if the ACCC is not notified, it can investigate any merger that it considers may raise competition issues.

Clearance options

Following 2017 changes to the CCA, the two main routes for obtaining regulatory certainty or comfort in relation to a proposed merger are informal merger clearance from the ACCC or merger authorisation. In addition to these options, merger parties themselves may seek a declaration from the Federal Court that their merger does not contravene the CCA. This approach is rarely used.

Informal clearance from the ACCC

This is a form of regulatory comfort letter in which the ACCC states that it does not propose to take any action in relation to the proposed merger. Informal clearance is not legally binding on the ACCC or third parties. However, it is overwhelmingly the most popular form of clearance for merger parties.

Merger authorisation from the ACCC

Alternatively, a statute-based clearance process is available that is binding on the ACCC and third parties on the basis that either:

  • the merger will not (or is not likely to) substantially lessen competition; or
  • the public benefits of the merger outweigh the public detriments.

Prior to the 2017 amendments, parties could opt to pursue formal merger clearance with the ACCC or make an application to the Australian Competition Tribunal (the Tribunal) for merger authorisation on public benefit grounds. While there were a number of applications to the Tribunal for merger authorisation, due to perceived procedural challenges, the formal merger process was never used and parties continued to rely on the informal merger process.

Since November 2017, when the new merger authorisation regime was implemented, there have been two applications for merger authorisation. Both have been successful on the grounds that the respective transactions would not substantially lessen competition.

Are decisions of the ACCC appealable?

Informal clearance

There is no right of appeal in relation to the ACCC’s decision in an informal merger clearance process. If the ACCC chooses to oppose a proposed merger, the merger parties could offer an undertaking to attempt to address the ACCC’s concerns, defend any court proceedings initiated by the ACCC or institute court proceedings themselves, seeking a declaration that the proposed acquisition does not contravene the CCA. There are few examples of court proceedings following a decision by the ACCC not to grant informal merger clearance. Most recently, on 8 May 2019, the ACCC announced it would oppose the proposed merger between TPG Telecom Limited and Vodafone Hutchison Australia Pty Ltd. Not accepting the ACCC’s clearance decision, in early 2020, the parties successfully sought a declaration in the Federal Court that the merger will not substantially lessen competition.

Authorisation

Following the amendments to the CCA, the Tribunal acts as a merits review body of ACCC authorisation decisions. Both the ACCC and the Tribunal will be subject to strict time limits for making authorisation decisions.

Timing of processes

Informal clearance

According to the ACCC’s Informal Merger Review Process Guidelines, a Phase I review typically takes approximately six to 12 weeks after an initial pre-assessment stage, during which the ACCC confidentially considers whether, based on the information provided, a public review is required. The pre-assessment process itself typically takes around two to four weeks.

If a Statement of Issues is released at the end of Phase I, the timeline will be extended to allow a Phase II review (typically for a further six to 12 weeks).

Timelines are indicative and can be suspended or extended at any stage. Parties may request that the time frame be suspended for commercial reasons, or the ACCC may suspend the time frame if it is awaiting additional information from the parties.

Authorisation

Under the merger authorisation regime, the ACCC is required to make a decision within 90 days unless the applicant agrees to an extension. If appealed, the Tribunal is required to issue its determination on an authorisation application within 90–120 days of receiving a valid application. Each time period can be extended.

Undertakings

Merger parties can provide the ACCC with a court-enforceable undertaking to implement structural, behavioural or other measures that address the competition concerns identified by the ACCC. The Merger Guidelines indicate a preference for undertakings that include structural rather than behavioural remedies.

The ACCC will ordinarily consult the market on a proposed draft undertaking. The ACCC will not accept undertakings if it is not satisfied that they address its competition concerns.

Cartels

The CCA strictly prohibits any contract, arrangement or understanding (CAU) between competitors (or potential competitors) that has:

  • the purpose or effect of fixing, controlling or maintaining prices; or
  • the purpose of:
    • restricting output or acquisitions;
    • colluding in tender or rigging bids; or
    • sharing markets by allocating customers, suppliers, territories, product lines or areas of business.

The criminal offence requires proof that there was knowledge or belief that the CAU contained a cartel provision. Under the CCA, the offence applies to companies but individuals can be held liable, including criminally (eg, a person who attempts to contravene, or who aids, abets, counsels or procures, induces or is in any way ‘knowingly concerned’ in a contravention).

Parallel criminal and civil sanctions exist for making or giving effect to a cartel provision.

Criminal cartel proceedings

The ACCC is responsible for investigating cartel conduct and will refer serious cartel conduct to the Commonwealth Director of Public Prosecutions (CDPP), who is responsible for prosecuting offences under Commonwealth law.

The ACCC has entered into a memorandum of understanding (MOU) with the CDPP. Among other things, the MOU outlines factors that are indicative of serious cartel conduct. The ACCC and CDPP also work together in assessing applications for immunity from criminal proceedings.

During 2020, the ACCC instituted criminal cartel proceedings against Alkaloids of Australia Pty Ltd and one of its executives in relation to allegations that Alkaloids of Australia and other overseas suppliers of the active pharmaceutical ingredient SNBB (scopolamine N-butylbromide, also known as hyoscine butylbromide) made and gave effect to arrangements to fix prices, restrict supply, allocate customers or geographical markets, or both, or to rig bids for the supply of SNBB to international manufacturers of generic antispasmodic medications. The ACCC alleges that the cartel operated over an almost 10-year period.

The ACCC has also instituted civil cartel proceedings against NQCranes, alleging that it had entered into a signed agreement with a competitor in the overhead crane market in August 2016. This agreement allegedly included a marking sharing provision, implemented by not targeting each other’s customers for overhead crane parts and servicing in certain geographic areas.

In addition to these proceedings, a number of additional criminal cartel matters have completed or are ongoing. Notably:

  • In December 2020, a former executive at BlueScope Steel Limited (BlueScope), was sentenced to eight months imprisonment for inciting the obstruction of an ACCC investigation into alleged price-fixing by BlueScope. [1] This was the first time an individual was charged with, and convicted of, inciting the obstruction of an ACCC investigation. The ACCC has separately filed civil proceedings against BlueScope and the executive, alleging they had attempted to incite steel manufacturers and distributors to enter into price-fixing agreements, which remains before the Federal Court.
  • In December 2020, ANZ, CitiGroup, Deutsche and a number of their executives were committed to the Federal Court of Australia for trial on criminal cartel charges. The charges involve alleged cartel arrangements in 2015 relating to trading in ANZ shares held by Deutsche Bank and Citigroup.
  • In June 2020, Wallenius Wilhelmsen Ocean AS (WWO), a Norwegian shipping company pleaded guilty to criminal cartel charges. The ACCC had alleged that WWO engaged in cartel conduct from June 2011 to July 2012 in relation to the shipping of vehicles to Australia.
  • In addition, proceedings against Vina Money Transfer (April 2019) and Country Care (February 2018) are ongoing.

Joint venture exception

The CCA contains a joint venture exception to cartel conduct. Where the exception applies, a cartel provision will only contravene the CCA if it has the purpose, effect or likely effect of substantially lessening competition.

The joint venture exemption will apply if:

  • the cartel provision is for the purposes of the joint venture;
  • the cartel provision is reasonably necessary for undertaking the joint venture; and
  • the joint venture is for the production, supply or acquisition of goods or services.

Concerted practices

The 2017 amendments introduced a prohibition against concerted practices that have the purpose, effect or likely effect of substantially lessening competition. While the concept of concerted practices is familiar internationally, the concept is new to Australian law and proceedings are yet to be brought under the new legislation.

‘Concerted practice’ is not defined in the CCA but is intended to capture conduct that falls short of a CAU, which constitutes a form of cooperation between two or more companies or people with the proscribed purpose or likely effect. The Explanatory Memorandum (EM) for this prohibition referred to the European law on concerted practices as an example of what the law is intended to capture.

The EM provides some guidance as to the type of conduct that could be characterised as a concerted practice. It is not necessary for any of the parties to act in the same manner or market, or at the same time. A concerted practice may involve, but does not require:

  • the formality or legally enforceable obligations of a contract;
  • the express communication of an arrangement (it may be established in the absence of any direct contact); or
  • the commitment of an understanding (it may be established even if none of the parties is obliged to act in a particular way).

It is not necessary for a concerted practice to have an anticompetitive provision as the focus is on the purpose, effect or likely effect of the practice itself.

The concept is not intended to capture innocent parallel conduct, such as where two firms determine prices independently but happen to charge similar prices for the same product, or public disclosure of pricing information that facilitates price comparison by consumers.

A concerted practice may arise from a single instance, rather than a course of conduct, and does not require that the practice is reciprocated or that the actions of other parties are altered in response. This raises questions about whether businesses that are unwitting recipients of information may be caught up in concerted practices.

The ACCC has not as yet commenced any proceedings in regard to a contravention of the concerted practices provision, although in December 2019, it accepted a court-enforceable undertaking from two roofing contractors regarding concerns that these parties had engaged in a concerted practice by making comments in relation to pricing on social media. The ACCC has publicly stated that bringing proceedings under this provision is a particular focus.

Misuse of market power

The CCA prohibits corporations with a substantial degree of market power from engaging in conduct that has the purpose, effect or likely effect of substantially lessening competition:

  • in a market where it has a substantial degree of power; or
  • in any other market in which the corporation or a related corporation supplies, acquires or is likely to supply or acquire goods or services directly or indirectly.

A party may now seek authorisation for conduct that would other­wise contravene the misuse of market power prohibition on public benefit grounds.

What is the applicable test for market power?

The applicable test is whether a corporation has a ‘substantial degree of power in a market’. Market power is determined in part by the ability to act free from constraints by competitors, customers or suppliers in a market. Market power can be evidenced by factors such as:

  • a corporation’s ability to raise prices without rivals taking away customers;
  • whether a corporation is vertically integrated (although this is not on its own determinative);
  • a corporation’s ability to set non-price terms and conditions; or
  • the barriers to entry into the market by new entrants.

‘Substantial’ is generally understood to mean ‘large or weighty’ or ‘considerable, solid or big’. A corporation may have substantial power in a market even if it does not control the market or have absolute freedom from constraint by the conduct of competitors, customers or suppliers.

There is no market share threshold above which a corporation will be presumed to have sub­stantial market power. However, a high market share is often a factor that tends to indicate, along with the other factors listed above, that a corporation has substantial power in a market.

It is possible for two or more corporations to simultaneously have a substantial degree of power in the same market.

Vertical arrangements

The main provisions that govern specific vertical arrangements are the prohibitions against:

  • exclusive dealing (including third-line forcing) where they have the purpose, effect or likely effect of substantially lessening competition; and
  • resale price maintenance (RPM), which is strictly prohibited.

The prohibition on RPM does not apply to:

  • genuine recommended resale prices;
  • genuine maximum resale prices; and
  • a refusal to supply loss-leading sellers.

The CCA contains notification and authorisation processes that will provide legal immunity for exclusive dealing and RPM. A notification process for resale price maintenance was introduced following the 2017 amendments. Prior to this, authorisation was the only way to obtain legal protection for RPM conduct. Authorisation will continue to be available, so businesses proposing to engage in resale price maintenance now have a choice of lodging a notification or seeking authorisation. As compared with authorisation, notification is a simpler and more timely process. The ACCC may grant authorisation for RPM for conduct if satisfied the conduct will provide a net public benefit.

ACCC proceedings alleging contraventions of the exclusive dealing and RPM prohibitions are rare. However, in November 2020, the ACCC instituted proceedings against Australasian Food Group Pty Ltd, trading as Peter Ice Cream (Peters), alleging it engaged in exclusive dealing conduct that hindered or prevented competition for the supply of single-wrapped ice creams to petrol and convenience retailers.

Public enforcement

The ACCC is the principal regulatory body charged with enforcement of Australian competition laws. In respect of any criminal contraventions, the ACCC will work closely with the CDPP and Australian Federal Police (AFP).

A competition investigation typically commences with an information-gathering phase where the ACCC seeks to obtain information relating to suspected contraventions of the CCA.

There is no set timetable governing the period in which the ACCC must complete an investigation or decide to bring court proceedings. However, the ACCC must bring any civil action for damages, pecuniary penalties or other remedial orders within six years of the contravention. Criminal prosecution of cartel provisions is not subject to any statutory limitation period.

ACCC investigatory powers

Voluntary and compulsory production powers

In the first instance, and outside of cartel investigations, the ACCC will usually consider whether it is appropriate to gather relevant information, documents and evidence on a voluntary basis.

However, where the ACCC has reason to believe that a person or corporation is capable of furnishing information, producing documents or giving evidence that relates to a possible contravention, it may issue a Section 155 notice to the relevant person or corporation that compels them to provide relevant information or documents. Privileged documents do not need to be provided to the ACCC.

The ACCC can also compel individuals named in a Section 155 notice to appear before the ACCC to give oral evidence in relation to a possible contravention.

Dawn raids

The ACCC has the power to conduct dawn raids in circumstances where a search warrant is issued. Dawn raids are less common in Australia compared with some other jurisdictions. However, they are often used in the context of potential criminal cartel investigations. The ACCC must apply to a magistrate for a search warrant. A search warrant will only be granted where the ACCC can satisfy the magistrate that the ACCC has reasonable grounds for suspecting there is evidence on a premises that is relevant to a contravention of the CCA.

A search warrant gives the ACCC wide-ranging powers, including the power to copy or seize documents or electronic equipment, operate electronic equipment on a premises, and take photographs or video recordings. The ACCC can also require that individuals answer questions or produce documents that may provide evidence in relation to a contravention.

Cartel investigation powers

As noted above, the ACCC and the AFP may conduct a joint investigation in relation to suspected criminal cartel conduct.

If the ACCC becomes aware of ongoing cartel conduct that could constitute a criminal offence, it may notify the AFP, which may obtain one or more of the following warrants:

  • telephone interception warrant;
  • stored communication warrant (voicemail and emails);
  • surveillance device warrants; and
  • telecommunications data collation.

The Immunity and cooperation policies

Consistent with other jurisdictions, the ACCC maintains immunity and cooperation policies as a key component of its compliance and enforcement arsenal. The Immunity Policy only applies to cartel conduct, whereas the Cooperation Policy extends to any matter that may involve a contra­vention of the CCA.

Immunity and Cooperation Policy

The Immunity and Cooperation Policy provides for the granting of immunity from civil cartel proceedings by the ACCC to the first eligible cartel participant to report involvement in a cartel, subject to satisfying the criteria outlined below.

An application for immunity can only be made by a single person or corporation. However, where a corporation is granted immunity, this may be extended to related corporate bodies, and to current and former directors, officers and employees of the corporation in certain circumstances.

The Immunity and Cooperation Policy was updated on 1 October 2019 and now requires applicants seeking immunity to enter into a cooperation agreement early in the immunity process, which clearly sets out the steps required for conditional civil and criminal immunity under the policy.

An immunity applicant must satisfy the following criteria to receive immunity:

  • the party must admit that their conduct may contravene the cartel provisions of the CCA;
  • the party must be the first party to apply for immunity in respect of the cartel;
  • the party must not have coerced others to participate in the cartel;
  • the party must have ceased involvement in the cartel;
  • any admissions made by a corporation must be a ‘truly corporate act’ (rather than isolated confessions of individual representatives);
  • the party must provide full disclosure and cooperation with the ACCC’s investigation and any ensuing court proceedings;
  • the party has entered into a cooperation agreement; and
  • the party has maintained, and agrees to maintain, confidentiality regarding its status as an immunity application, details of the investigation and any ensuring civil or criminal proceedings.

For criminal cartel conduct, the ACCC will make recommendations to the CDPP about whether immunity from criminal prosecution should be granted. While the CDPP exercises independent discretion, it is unlikely to refuse immunity from criminal prosecution if the ACCC has granted immunity from civil prosecution.

When a person or entity is not eligible for ‘first-in’ immunity from cartel proceedings, the ACCC recognises individual and corporate cooperation in both civil and criminal cartel investigations.

The ACCC will identify cooperation to the court in any proceedings by way of submissions to the court. Cooperation is ordinarily a mitigating factor relevant to determining penalties. While the ACCC may make penalty recommendations on the basis of cooperation, ultimately penalties are a matter for the court.

Cooperation Policy

The ACCC’s Cooperation Policy sets out possible leniency measures that the ACCC may adopt when dealing with entities that cooperate with ACCC investigations.

The ACCC is most likely to consider adopting leniency in respect of a corporation or individual that:

  • comes forward with valuable and important evidence of a contravention of the CCA of which the ACCC is otherwise unaware or has insufficient evidence to initiate proceedings;
  • provides the ACCC with full and frank disclosure, including all relevant documentary evidence available to it;
  • cooperates fully with the ACCC’s investigation and any ensuing litigation; and
  • has not compelled or induced any other person or corporation to take part in the contravening conduct and was not a ringleader or originator of that conduct.

Penalties

Civil pecuniary penalties apply to contraventions of the competition prohibitions of the CCA. The maximum civil penalty per contravention is:

  • for companies, the greater of A$10 million, three times the value of the benefit obtained that is reasonably attributable to the contravention or (where benefits cannot be determined) 10 per cent of the annual turnover connected with Australia of the company and related bodies ­corporate; and
  • for individuals, up to A$500,000.

For companies, the same maximum penalties apply in respect of a criminal cartel contravention.

An individual convicted of a criminal cartel offence can face up to 10 years’ imprisonment and a fine of up to A$420,000. It is illegal for corporations to indemnify officers, employees or agents in respect of penalties and legal costs.

Other non-pecuniary penalties include declarations, injunctions, community service orders, adverse publicity orders and disqualification of a person from managing corporations.

Penalties in Australia have not generally been anywhere near the statutory maximum. The ACCC has been seeking larger penalties and its approach appears to be resonating with the court. For example, in the Nippon Yusen Kabushiki Kaisha criminal cartel decision, the maximum penalty that could have been imposed was A$100 million. The court concluded that the appropriate penalty would have been A$50 million, which would have been the largest penalty ever in Australia, but ordered a A$25 million penalty that included a 50 per cent discount for the early plea, past and future assistance, and cooperation and contrition on the part of Nippon Yusen Kabushiki Kaisha.

The highest fines imposed under the CCA include:

  • December 2019: the Federal Court ordered Volkswagen AG to pay A$125 million in penalties for breaching the Australian Consumer Law (Schedule 2, CCA) by making false representations about compliance with Australian diesel emissions standards. This is the highest total penalty order imposed for contraventions of the Australian Consumer Law. [2]
  • August 2019: the Federal Court ordered Japanese shipping company K-Line to pay a fine of A$34.5 million for engaging in criminal cartel conduct. This is the largest ever criminal fine imposed under the CCA, although is slightly lower than the A$36 million civil penalty issued to Visy in 2007 in relation to its involvement in cartel conduct.

International aspects

Extraterritorial application of CCA

Conduct occurring wholly outside Australia may come within the jurisdiction of the CCA if the contravening entity is:

  • an Australian citizen;
  • a person ordinarily resident in Australia;
  • a body corporate incorporated in Australia; or
  • a body corporate carrying on business in Australia.

What will amount to ‘carrying on business’ in Australia has been the subject of extensive judicial interpretation. It is possible that a foreign corporation operating in Australia through a wholly owned subsidiary may be considered to ‘carry on business’ in Australia. Similarly, supplying goods or services to distributors in Australia (including from overseas), or supplying or acquiring intellectual property rights in Australia, may also amount to ‘carrying on business’ in Australia.

In addition, specific provisions within the CCA require a territorial nexus to Australia. In particular, competition tested prohibitions (ie, prohibitions that require there to be a purpose, effect or likely effect of substantially lessening competition in a market) require the affected market to be a market in Australia. Furthermore, the cartel prohibitions only apply to the extent that two parties to a contract, arrangement or understanding compete in relation to the supply or acquisition of goods or services in Australia, or between Australian and places outside Australia.

ACCC cooperation with competition authorities in other jurisdictions

The ACCC has signed cooperation agreements with a number of countries or other bodies, including the United States, Taiwan, Papua New Guinea, New Zealand, Canada, Fiji, South Korea, the United Kingdom, the OECD, the European Commission, India, China, Japan and the Philippines. The agreements deal with mutual assistance and coordination of enforcement activities.

The ACCC is also a member of the International Competition Network, which focuses on addressing antitrust enforcement and policy issues of common concern to its members worldwide.

In addition, the CCA enables the ACCC to disclose ‘protected cartel information’ (provided by successful immunity applicants) to overseas competition authorities.


Notes

[1] ACCC, ‘Ex BlueScope GM Jason Ellis convicted and sentenced for obstructing ACCC cartel investigation’, Media releases (Web page, 16 December 2020) http://www.accc.gov.au/media-release/ex-bluescope-gm-jason-ellis-convicted-and-sentenced-for-obstructing-accc-cartel-investigation.

[2] ACCC, ‘Court orders Volkswagen to pay record $125 million in penalties’ (Web page, 20 December 2019) http://www.accc.gov.au/media-release/court-orders-volkswagen-to-pay-record-125-million-in-penalties.

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