The "cryptic crossword" of Australian cartel laws still unsolved: An update on criminal cartel prosecutions

"Those responsible for drafting the cartel offence provisions in the Competition and Consumer Act – none of whom could possibly have ever set foot in a criminal trial court before – appear to have approached the drafting task as if it were akin to producing a cryptic crossword.

The offence provisions, when read with the extensive definitions of the terms used in them, are prolix, convoluted and labyrinthine…

By the time the maze of provisions is worked through, it is very easy to lose sight of exactly what conduct the offence provisions are intended to bring to account and punish."

That critique from Justice Wigney in the Citigroup proceedings may be one reason for the relatively low number of prosecutions since criminal liability was introduced for cartel conduct in Australia in 2009. The Commonwealth Director of Public Prosecutions (CDPP) has brought a total of ten criminal cartel conduct prosecutions following reference from the Australian Competition and Consumer Commission (ACCC), with only a small number of new criminal prosecutions commenced since our last update in December 2021.

Of the 10 prosecutions:

• six prosecutions were (or are being) resolved by guilty pleas;
• one resulted in an acquittal (Country Care);
• two prosecutions were withdrawn (CFMMEU and Citigroup); and
• one was resolved by a combination of five guilty pleas and the withdrawal of the charges against one defendant (who intended to contest the proceedings) (Vina Money).

Background: cartel offences in Australia

The Competition and Consumer Act 2010 (Cth) makes it a criminal offence for individuals and companies making or giving effect to a contract, arrangement or understanding with competitors that has a purpose, effect or likely effect of fixing, controlling or maintaining prices for goods or services; or a purpose of:

• preventing, restricting or limiting production, supply or capacity of any party;
• allocating customers, suppliers or territories between the parties; or
• bid-rigging (agreeing who will submit a bid in a tender, win a tender and/or at what price).

The Criminal Code Act 1995 (Cth) requires certain obstacles be overcome in order to prosecute a criminal cartel offence, including proving certain fault elements, proving the offence beyond reasonable doubt; and (depending on the circumstances) obtaining a unanimous jury verdict.

Individuals sentenced for the first (and second) time – but no jail time

In Australia, to date, no defendant found guilty of a cartel offence has been sentenced to a custodial sentence to be served in jail.

However, intensive corrections orders (ICOs) and suspended sentences have been made or imposed (in Alkaloids of Australia and Vina Money). ICOs are considered a form of custodial sentence.

During 2022, suspended sentences ranging from 9 months to 2 years and 6 months were imposed on four (out of five) individual defendants in the Vina Money case. The sentences related to price fixing of the Australian dollar/ Vietnamese dong exchange rate and the transaction fees charged to customers who were sending money from Australia to Vietnam.

In late 2022, former export manager of Alkaloids of Australia, Christopher Joyce, was sentenced to an ICO of 2 years and 8 months as well as 400 hours of community service. Under the ICO, Joyce is required not to commit any offence and must submit to supervision by a community corrections officer. Under this supervision condition, Joyce must comply with all reasonable directions from a community corrections officer which may include a range of matters such as participating in certain education programs, undertaking certain activities, not changing place of residence, nor associating with specific people.

Joyce pleaded guilty to charges relating to cartel arrangements with overseas pharmaceutical ingredient suppliers that involved price fixing, bid rigging, output restriction and market allocation. The Court considered a home detention sentence but in light of the offences and the offender, decided that community service was more appropriate in this case. Joyce is also banned from managing corporations for five years.

Albeit not a jail sentence, this ICO is the longest custodial sentence imposed to date on an individual under Australia's criminal cartel laws.

Off the hook: CDPP discontinues proceedings

To date the CDPP has discontinued two of the ten prosecutions it has commenced and dropped the case against one of the defendants in the Vina Money prosecution.

The fifth individual defendant in the Vina Money proceedings, Jamie Le, did not plead guilty and in September the case against him was dropped.

Citigroup case discontinued

In February 2022, the CDPP discontinued proceedings against the remaining defendants in the Citigroup bank cartel case. The indictment in that case had been subject to two strike out applications and been re-drafted twice, and charges had earlier been dropped against some of the individual defendants. The CDPP commented only briefly that there were "no longer reasonable prospects of conviction" and that "the prosecutions were complex, in part due to the highly technical nature of many of the elements that needed to be proved to establish criminal liability".

This was a complex and highly controversial prosecution with charges laid (and later dropped) against a number of banks and bank executives arising from a rights issue by ANZ Bank which was only partly subscribed. The charges were heavily contested and series of challenges were levied at the ACCC's approach to gathering evidence and granting immunity to one bank and its executives in connection with the charges.

In a speech given in June 2022, Justice Wigney of the Federal Court noted, that while the prosecutor's reasons for discontinuing were "unclear", it was in his assessment "in no small part due to the complexity of the offence provisions themselves".

Waste industry prosecutions lead to early guilty pleas

In August and December 2022, two further criminal cartel prosecutions were launched in the waste industry against Aussie Skips and Bingo Industries, alleging they engaged in price fixing in relation to demolition waste services and the supply of skip bins in Sydney. It took just over two months for both companies and both chief executives to plead guilty after being charged. The sentencing hearing for Bingo Industries was held in early March 2023 while the Aussie Skips hearing is scheduled for May.

While no sentence has yet been handed down against Bingo or its CEO Mr Tartak, during the sentencing hearing the CDPP made submissions that a period of imprisonment should be imposed but did not rule out that this may be served by an ICO involving community service. The CDPP is also seeking a five-year disqualification order against Mr Tartak.

Raising the stakes: higher penalties in force for cartel conduct

From 9 November 2022 higher penalties apply for cartel conduct.

For companies, the new maximum fine for each criminal cartel offence is now the greater of:

• A$50 million;
• three times the total benefits that are reasonably attributable to the offence; or
• if the benefits of the conduct cannot be determined, 30% of the company's Australian connected turnover during the breach period.

For individuals, the maximum criminal penalty for cartel conduct is up to 10 years’ imprisonment and/or fines of up to A$550,000 for each offence. Individuals may also be subject to orders disqualifying them from managing a corporation and community service orders.