The Law
Cartels
About cartels
NOTE: New cartel laws came into operation on 24 July 2009.
Australia now has a specific prohibiton of 'cartel conduct' (Division 1 of Part IV), both as a criminal offence and civilly. In addition to the specific prohibition, contracts arrangements or understandings (whether between competitors or not) which can be proven to substantially lesson competition, or be likely to do so, constitute a civil contravention of the Act pursuant to section 45. Dual listed company arrangements which substantially lessen competition are now also separately prohibited by section 49.
Exclusionary provisions (boycotts) between competitors are also prohibited per se by section 45 of the Act, and are defined in section 4D.
A separate telecommunications regime applies in relation to anti-competitive conduct in that industry.
Note: the ACCC has released a brief notice outlining the new cartel laws.
Cartel conduct
Division 1 of Part IV of the TPA, containing provisions 44ZZRA - 44ZZRV, now contains the primary prohibition on cartel conduct (in the form of price fixing, bid rigging, market division and restricting outputs) in Australia. This Division was inserted by the Trade Practices Amendment
(Cartel Conduct and Other Measures) Act 2009 and entered into operation on 24 July 2009. It replaces the former s 45A
The criminal and civil prohibitions are the same save for an additional fault element of 'knowledge or belief' in relation to the criminal offence.
Cartel conduct is defined in s 44ZZRD as including four forms of activity: price fixing, market division, restricting outputs and bid rigging. This conduct is prohibited where made or given effect to in a 'contract, arrangement or understanding' and two or more of the parties involved are competitors (or would be but for the conduct). In relation to price fixing the provision must have the 'purpose or effect' of price fixing; in relation to the other forms of conduct the provision must have the requisite 'purpose'. Price fixing is defined in the same way in s 44ZZRD as it was in the former s 45A
Criminal penalties of up to $220,000 per offence or up to 10 years imprisonment arebe available for individuals found to have committed a cartel offence. The civil penalties for making or giving effect to a cartel provision are the same as those currently available for other contraventions of Part IV. View remedies page.
Cartels prohibited subject to a competition test
In addition to cartel conduct as defined in s 44ZZRD, section 45 of the Trade Practices Act (TPA) prohibits contracts, arrangements or understandings containing a provision which has the purpose, effect or likely effect of substantially lessening competition. These arrangements will genearlly be horizontal in nature, but this is not a requirement of s 45 (and as a number of anti-competitive vertical arrangements are caught by other more specific provisions in Part IV, anti-overlap provisions will give those specific provisions priority over s 45). Certain collective bargaining arrangements are permitted provided they have been notified in advance to the ACCC (see discussion under authorisation and notification below).
Dual listed company arrangements
Until recently the conduct of dual listed companies was assessed under s 45. As a result of legislation introduced in 2006 dual listed companies are now assessed under s 49 which prohibits parties making (or giving effect to) a dual listed company arrangement if a provision fo the proposed arrangement would have the purpose, effect or likely effect of substantially lessening competition.
The Competition Rule - Telecommunications
Anti-competitive conduct in the telecommunications industry is regulated by Part XIB TPA in addition to Part IV. Section 151AJ(2) provides:
‘A carrier or carriage service provider engages in anti-competitive conduct if the carrier or carriage service provider:
(a) has a substantial degree of power in a telecommunications market; and
(b) either
(i) takes advantage of that power with the effect, or likely effect, of substantially lessening competition in that or any other telecommunications market; or
(ii) takes advantage of that power, and engages in other conduct on one or more occasions, with the combined effect, or likely combined effect, of substantially lessening competition in that or any other telecommunications market'.
Pursuant to s 151AJ(3) a carrier or carriage service provider also engages in anti-competitive conduct if they engage in conduct in contravention of ss 45, 45B, 46, 47 or 48 and the conduct relates to a telecommunications market.
Section 151AK contains the 'competition rule', providing that a 'carrier or carriage service provider must not engage in anti-competitive conduct.'
This Part allows the ACCC to issue a 'competition notice' stating that a carrier or carriage service provider is engaging in anti-competitive conduct or that they have contravened the competition rule. Where a notice is given by the ACCC stating that a carrier or provider has contravened or is contravening the rule, that notice is prima facie evidence of the matters described in the notice. The ACCC may also provide exemptions from the definition of anti-competitive conduct for certain conduct.
The Law
Part IV Restrictive Trade Practices
Division 1
View Division 1 Part IV in full as originally introduced (still current)
Subdivision A—Introduction
44ZZRC Extended meaning of party
44ZZRE Meaning of expressions in other provisions of this Act
Subdivision B—Offences etc.
44ZZRF Making a contract etc. containing a cartel provision
44ZZRG Giving effect to a cartel provision
44ZZRI Court may make related civil orders
Subdivision C—Civil penalty provisions
44ZZRJ Making a contract etc. containing a cartel provision
44ZZRK Giving effect to a cartel provision
Subdivision D—Exceptions
44ZZRM Cartel provision subject to grant of authorisation
44ZZRN Contracts, arrangements or understandings between related bodies corporate
44ZZRO Joint ventures—prosecution
44ZZRP Joint ventures—civil penalty proceedings
44ZZRQ Covenants affecting competition
44ZZRR Resale price maintenance
44ZZRT Dual listed company arrangement
44ZZRU Acquisition of shares or assets
Division 2—Other provisions
45 Contracts, arrangements or understandings that restrict dealings or affect competition
45B Covenants affecting competition
45C Covenants in relation to prices
45EA Provisions contravening section 45E not to be given effect
45EB Sections 45D to 45EA do not affect operation of other provisions of Part
49 Dual listed company arrangements that affect competition
Repealed provisions
Section 45A repealed, effective 24 July 2009.
Part XIB - The telecommunications industry: Anti-competitive conduct and record-keeping rules
[The following contains select provisions from this part; for the full part see TPA]
Division 2 - Anti-competitive conduct
151AJ Anti-competitive conduct
Cases relating to cartels
Anti-competitive agreements and price fixing
Contract, arrangement or understanding
Re British Basic Slag Ltd’s Agreements [1963] 2 All ER 807
Agreement
R v Associated Northern Collieries (1911) 14 CLR 387
Establishing collusion
TPC v David Jones (Australia) Pty Ltd (1986) 13 FCR 446
Establishing collusion; price fixing
TPC v Email Ltd (1980) 43 FLR 383
Establishing collusion; price fixing
TPC v Nicholas Enterprises (1979) 40 FLR 83
Contract, arrangement or understanding
TPC v Service Station Association Ltd (1993) 44 FCR 206
Contract, arrangement or understanding
Substantial lessening of competition
ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No. 1) (1990) 27 FCR 460
Dowling v Dalgety Australia Ltd (1992) 34 FCR 109
Substantial lessening of competition; purpose
AW Tyree Transformers Pty Ltd and Wilson Transformer Co Pty Ltd (1997) ATPR (Com) 50–247
Substantial lessening of competition
Gallagher v Pioneer Concrete (NSW) Pty Ltd (1993) 113 ALR 159
Substantial lessening of competition
Stationers Supply Pty Ltd v Victorian Authorised Newsagents Associated Ltd (1993) 44 FCR 35
Purpose of substantially lessening competition; exclusive dealing
Price Fixing
ACCC v Visy Industries Holdings Pty Limited (No 3) [2007] FCA 1617
Price fixing - remedies
TPC v David Jones (Australia) Pty Ltd (1986) 13 FCR 446
Establishing collusion; price fixing
TPC v Email Ltd (1980) 43 FLR 383
Establishing collusion; price fixing
Articles relating to cartels
Yuliya Bolotova, Cartel Overcharges: An Empirical Analysis, Working Paper, September 15, 2006
John Connor - Slideshow - 'Cartels and Antitrust Portrayed 1990-2008' (December 2008)
Ari Hyytinen, Frode Steen and Otto Toivanen, 'Cartels Uncovered' (Discussion Paper, 16 March 2010)
Criminal cartels in Australia
Caron Beaton-Wells, 'The Politics of Cartel Criminalisation: A Pessimistic View from Australia' (2008) 29 European Competition Law Review
Caron Beaton-Wells, 'Criminalising Cartels: Australia’s Slow Conversion' (2008) 31 World Competition pp. 205-233
Immunity
Other
Caron Beaton-Wells and Neil Brydges, The Cardboard Box Cartel Case: Was All the Fuss Warranted? (2008) 36 Australian Business Law Review, U of Melbourne Legal Studies Research Paper No. 393 (SSRN: http://ssrn.com/abstract=1406267)
United Kingdom
Andreas Stephen, The UK Cartel Offence: Lame Duck or Black Mamba?, CCP Working Paper 08-19
Reports relating to cartels
Dawson Report (Chapter 10 discussing penalties for cartels)
Guidelines
ACCC Cartel Guidelines July 2009
Anti-competitive Conduct in the Telecommunications market: An Information Paper (ACCC 1999)
Telecommunications are regulated by Part XIB of the TPA
Can Growers Collectively Bargain? (ACCC 2007)
Immunity
ACCC, Immunity Policy for Cartel Conduct 2009
ACCC, Immunity Policy Interpretation Guidelines 2009
DPP, Prosecution Policy of the Commonwealth (see Annexure 2)
Leniency Policy for Cartel Conduct
International
ICN Member State Anti-Cartel Templates
Useful links
The Cartel Project
Launched April 2009 this is the home page for an "interdisciplinary empirical research project [which] will investigate how and why criminalisation of serious cartel conduct has become bipartisan policy in Australia."