i ENFORCEMENT POLICIES AND GUIDANCE
i Statutory framework
Australia's competition law is contained in the Competition and Consumer Act 2010 (Cth) (CCA) and is administered by the Australian Competition and Consumer Commission (ACCC). The ACCC has powers to investigate and bring proceedings against parties that have engaged in cartel conduct, including the power to:
- compel any person or company to provide information about a suspected breach of the CCA, including by providing documents or oral evidence;2
- obtain search warrants for company offices and the premises of company officers;3 and
- facilitate surveillance of individuals, including phone taps, through collaboration with the Australian Federal Police.
In the CCA, there are four categories of cartel conduct that are prohibited by Section 45AD. These provisions prohibit making or giving effect to a contract, arrangement or understanding between competitors that has the purpose of:
- or is likely to have had the effect of, price-fixing;
- market sharing;
- bid rigging; or
- preventing, restricting or limiting production, capacity or supply.
Cartel conduct constitutes both a civil and a criminal offence under the CCA, which does not differentiate between differing degrees of cartel behaviour. However, under the Criminal Code Act 1995 (Cth), additional requirements must be met in order to prosecute a criminal cartel offence, including the need to establish certain fault elements, prove the offence beyond reasonable doubt and, depending on the circumstances, obtain a unanimous jury verdict. While the ACCC investigates and litigates cartel conduct as a civil offence, it is the Commonwealth Director of Public Prosecutions (CDPP) who prosecutes criminal cartel offences. The ACCC and the CDPP have signed a memorandum of understanding (MOU), which provides that the ACCC will refer cartel conduct that can cause large-scale or serious economic harm to the CDPP for prosecution.
II COOPERATION WITH OTHER JURISDICTIONS
Cooperation between antitrust enforcement agencies of different countries has become increasingly important. Cross-border trade has increased and led to greater scope for international cartel conduct. For example, two treaties allow for assistance between Australia and the United States to exchange evidence and enforce their respective competition laws: the Australia United States Mutual Antitrust Enforcement Assistance Agreement, and the Agreement between the Government of Australia and the Government of the United States relating to cooperation and antitrust matters.
The ACCC has also signed agreements and MOUs with numerous other antitrust agencies, including in Canada, China, Taiwan, the European Union, Fiji, India, Japan, New Zealand, Papua New Guinea, the Philippines, the Republic of Korea and the United Kingdom. These agreements aim to assist with cross-border investigations and assist other countries, particularly in the Asia-Pacific region, in building effective systems and appropriate frameworks for economic regulation.
Additionally, the ACCC receives and makes requests outside these formal arrangements. For example in 2017–2018, the ACCC received and responded to, or made requests to, agencies in Brazil, Canada, Chile, China, Columbia, Denmark, the European Union, France, Germany, Hong Kong, India, Israel, Italy, Japan, Kenya, Malaysia, Mongolia, the Netherlands, New Zealand, Singapore, South Africa, Spain, Sweden, Taiwan, Thailand, the United Kingdom, the United States and Vietnam.
i Information sharing
The ACCC regularly exchanges information with overseas agencies. It has exchanged information with foreign agencies and government bodies on 175 occasions, facilitated by agreements and MOUs with these agencies, and bilateral waivers obtained from the affected parties. The ACCC has a standard non-negotiable disclosure consent form to allow confidential information to be disclosed to, among other entities, these foreign agencies and government bodies.
The CCA permits the ACCC to disclose 'protected information' to a foreign government body when the chairman of the ACCC is satisfied that disclosure would assist the agency. Protected information is defined in Section 155AAA of the CCA to include information that was given in confidence to the ACCC, including by a foreign government body or obtained by the ACCC under compulsion. The chairman is entitled to impose conditions, in writing, in relation to the disclosure of protected information.
In relation to its treatment of confidential personal information, under the Privacy Act 1988 (Cth), the ACCC is prohibited from disclosing personal information for a purpose other than that for which it was collected, subject to the exceptions provided in the Privacy Principles.
Additionally, under the Leniency Policy, the ACCC will not share with other regulators any confidential information provided by an informant, or the identity of the informant, without the informant's consent. However, in international matters, it will seek to obtain the informant's consent as a matter of course and request that the informant provide written consent to disclosure for each jurisdiction in which he or she intends to seek immunity or leniency for prohibited conduct.
ii Extradition requests
Extradition procedures are dictated by the Extradition Act 1988 (Cth). Australia accepts extradition requests from countries that have been declared an extradition country. Regulations also make provisions for extradition procedures with countries that have non-treaty extradition arrangements with Australia, including the United Kingdom and Japan.
For the Australian government to agree to an extradition request, the conduct in question must amount to an offence in both Australia and the foreign country. As cartel conduct constitutes a criminal offence under the CCA, there is scope for Australia to accept extradition requests for contravening conduct from foreign agencies.
iii Extraterritorial discovery
Extraterritorial discovery constitutes the gathering of evidence for foreign proceedings and discovery, which is not permissible.
iii JURISDICTION LIMITATIONS, AFFIRMATIVE DEFENCES AND EXEMPTIONS
i Extraterritorial application of Australia's competition laws
Section 5(1) of the CCA provides that Australia's competition laws extend to the engaging of conduct outside Australia. The laws extend to companies incorporated or carrying on business in Australia, Australian citizens or persons ordinarily resident in Australia. The laws also extend to suppliers of goods and services in relation to a misuse of market power and exclusive dealing.
Joint venture exemption
The CCA provides for exemptions from civil and criminal prohibitions for joint ventures.4 Joint ventures contained in an arrangement or understanding (not simply contracts) and for the acquisition of goods or services (not just production or supply) are exempt from civil and criminal prohibition. However, the CCA imposes some additional requirements to qualify for the joint venture exemption.
For a production, supply or joint acquisition joint venture, the exception from the application of the cartel laws will be available to the extent that the cartel provision is reasonably necessary for undertaking the joint venture, and the joint venture is not carried out for the purpose of substantially lessening competition.
While the meaning of the term 'reasonably necessary' is as yet unclear in the context of the joint venture exception, the term imports a consideration of the purposes of the joint venture and whether the provision in question is reasonably necessary to attain the joint venture's purposes. If this could be achieved through less restrictive means, then the provision is unlikely to be considered reasonably necessary.
The ACCC has an Immunity and Cooperation Policy that grants full immunity from any civil enforcement action brought by the ACCC to the first individual or corporation that meets the criteria under the policy.5 Those criteria include continuing cooperation and full disclosure of information relating to the alleged cartel.
The ACCC also accepts applications for criminal immunity and makes recommendations to the CDPP that an applicant be granted immunity pursuant to the Prosecution Policy of the Commonwealth.6 Such a recommendation will be made only where the individual or corporation first satisfies the criteria for a conditional immunity application under the ACCC's Immunity and Cooperation Policy.
Legal developments on cartel law in Australia
In June 2018, the ACCC laid charges against four major Australian banks and several executives regarding alleged criminal cartel conduct in breach of the CCA (the Share Placement Cartel). The alleged cartel behaviour relates to the A$2.5 billion sale in Australia of 80.8 million discounted shares to institutional investors in 2015. The parties have asserted that the use of underwriting syndicates has operated successfully without prosecution for decades. Accordingly, the case will have ramifications on market practice in the area of institutional placements and capital raisings. The action is the fourth criminal action for cartel conduct since 2017, and only the second instance in which individuals have been criminally charged. Earlier in 2018, the ACCC identified cartel conduct as one of the ACCC's priorities for 2018.
On 15 February 2018, the CDPP commenced proceedings against Country Care Group Pty Ltd (Country Care), its managing director and former business development manager. This marked the first time that individuals have been charged under Australia's criminal cartel prohibitions. It was alleged that Country Care, a Mildura-based company, engaged in cartel conduct involving assistive technology products used in rehabilitation and care of elderly people, including beds and mattresses, wheelchairs and walking frames.
On 16 May 2018, the Full Federal Court ordered Japanese company Yazaki Corporation to pay A$46 million in penalties for cartel conduct. The Court found that Yazaki had engaged in anticompetitive cartel conduct in the supply of wire harnesses used in the manufacture of the Toyota Camry. The penalty is the highest handed down to date under the CCA.
On 14 June 2017, the High Court of Australia found that price-fixing agreements entered into by Air New Zealand Ltd, PT Garuda Indonesia Ltd and other international airlines, between 2002 and 2006, breached Australia's competition laws. The ACCC alleged that the two aforenamed companies engaged in collusive behaviour by fixing surcharges and fees on the carriage of air cargo to Australia. In the first instance, the case was dismissed as the alleged collusive conduct was engaged in Indonesia and therefore no Australian market was involved.7
Upon appeal by the ACCC, the majority of the Full Court of the Federal Court of Australia held that the relevant market for the air cargo services from Hong Kong to Australian ports, involving airlines, freight forwarders, exporters and (at least) including some large shippers, were markets 'in Australia'.8 This was essentially an adoption of a broader definition of 'the relevant market'.
The High Court's findings consider the approach to market definition. Rather than focusing on a traditional approach to geographical market definition, the High Court took an approach that focused on the geographical area in which the airlines competed. While affirming the decision of the Full Federal Court, the High Court placed less emphasis on the fact that some of the air cargo services were performed in Australia. The key consideration for the High Court was that the airlines engaged in rivalry in Australia, in terms of competing for the business of Australian customers.
On 14 July 2016, the ACCC commenced its first criminal charge under the former Section 44ZZRG(1)9 of the CCA (which provided that it was an offence to give effect to a cartel provision) against Nippon Yusen Kabushiki Kaisha (NYK), a global shipping company based in Japan. It alleged that NYK had engaged in a cartel from July 2009 to September 2012. On 18 July 2016, NYK pleaded guilty to the charges of criminal cartel conduct and, on 3 August 2017, the Federal Court convicted NYK of criminal cartel behaviour and ordered it to pay a fine of A$25 million. The fine incorporated a discount of 50 per cent for NYK's early guilty plea, assistance and cooperation.
iV LENIENCY PROGRAMMES
The ACCC first introduced a leniency programme in July 2003. The current policy, entitled 'ACCC immunity and cooperation policy for cartel conduct' (the Leniency Policy) and published in September 2014, sets out the ACCC's approach to cooperation by cartel participants (and is currently again under review). At the time of publication of the current policy, the ACCC chairman emphasised the utility of the Leniency Policy in detecting and prosecuting cartels:
Due to the difficulty in detecting cartels and the damage that cartels cause to competitors and consumers, identifying and prosecuting cartel conduct is an enduring priority for the commission . . . This immunity policy and the threat of civil and criminal penalties are fundamental to the effective discovery and disruption of cartel conduct.10
The Leniency Policy offers two forms of leniency for cartel participants who are willing to assist the ACCC in its investigation:
- Immunity: the first cartel participant to approach the ACCC may be granted conditional immunity from civil enforcement actions, and potentially from criminal action by the CDPP if it meets the necessary criteria.
- Cooperation: if a cartel participant fails to meet the criteria for conditional immunity, it may still receive leniency from the ACCC, or the court if it cooperates in the ACCC's investigation.
A corporation that is or was party to a cartel (in a primary or ancillary capacity) will be eligible for conditional civil immunity if it meets the following seven conditions.
- It admits that its conduct may contravene the CCA.
- It is the first party to apply for immunity in respect of the cartel.
- It has not coerced others to participate in the cartel.
- It has ceased its involvement in the cartel, or indicated to the ACCC that it will cease its involvement.
- Its admissions are a true corporate act, rather than isolated confessions of individual representatives.
- It has provided full, frank and truthful disclosure, and has cooperated fully and expeditiously while making the application, and undertakes to continue to do so throughout the investigation and any subsequent court proceedings.
- The ACCC has not received written legal advice that it has reasonable grounds to institute proceedings in respect of the cartel.
An individual who was a director, officer or employee of a corporation that is or was party to a cartel may also apply for conditional immunity, subject to the same criteria (save for the requirement that the admissions are a true corporate act).
When determining whether to grant conditional immunity, the ACCC will interpret the Leniency Policy in favour of the applicant in the case of any ambiguity. Further, in rare and exceptional circumstances, the ACCC may grant immunity to an applicant that fails to meet the criteria (including second or subsequent applicants) under its cooperation policy by not commencing civil proceedings against the applicant. The ACCC has not issued any guidance as to what constitutes 'rare and exceptional circumstances'.
Under an agreement between the ACCC and the CDPP, if the ACCC considers that an applicant meets the criteria for conditional immunity, it may recommend to the CDPP that the applicant be granted immunity from criminal prosecution. The CDPP will then exercise independent discretion to assess whether the applicant meets the criteria under the Leniency Policy.
ii 'Amnesty plus' regime
A cartel participant who does not qualify for conditional immunity but who cooperates with the ACCC in relation to a cartel may discover a second, unrelated cartel. In such a case, that party may apply for conditional immunity for the second cartel as well as a recommendation by the ACCC to the court for a further reduction in penalty in relation to the original cartel.
iii Obtaining a marker
Corporations or individuals who intend to apply for immunity can request a marker from the ACCC. The marker will have the effect of preserving the applicant's status as the first immunity applicant in respect of a cartel, giving it a limited period of time to gather the required information to satisfy the criteria for conditional immunity. To obtain a marker, the applicant must provide a description of the cartel conduct that allows the ACCC to confirm that no other party has applied for immunity or obtained a marker in respect of that cartel. If this standard is met, the request may be made anonymously.
If the applicant wishes to proceed with the immunity application after obtaining a marker, it must make a 'proffer' by providing the ACCC with a detailed description of the cartel conduct. The proffer may be made orally or in writing. If the ACCC is satisfied that the applicant has met the criteria for immunity, it will grant conditional immunity.
iv Duties of cooperation required for a grant of leniency
Once conditional immunity is granted, the applicant has an obligation to provide full, frank and truthful disclosure and to cooperate fully and expeditiously with the ACCC throughout its investigation and any subsequent court proceedings. The applicant must also keep confidential its status as an immunity applicant and the details of any investigation or court proceedings, unless otherwise required by law or with the ACCC's written consent.
If the applicant complies with these obligations, conditional immunity will become final immunity upon the resolution of any proceedings against other cartel participants.
v Reductions in liability
The first applicant to meet the criteria in the Leniency Policy is completely immune to civil action by the ACCC, and potential criminal prosecution by the CDPP, as discussed in Section IV.iii. It should be noted, however, that immunity under the Leniency Policy is not a bar to private enforcement actions. The applicant may still be liable to compensate parties that suffered damage as a result of the cartel conduct.
A further benefit of conditional immunity for a corporation is that it may also seek derivative immunity for related corporate entities or current and former directors, officers and employees. A related corporate entity will be eligible for derivative immunity if, for all or part of the period of the cartel conduct, the corporation with conditional immunity held a controlling interest in the related corporate entity, or the related corporate entity held a controlling interest in the corporation, and the related corporate entity meets the conditions set out in Section IV.i. Individual directors, officers or employees will similarly qualify for derivative immunity if they meet the conditions for individual conditional immunity.
If an applicant fails to meet these conditions, it may still receive leniency from the ACCC or the court if it cooperates in the ACCC's investigation. There is no sliding scale for discounts awarded for cooperation but, in civil proceedings, the ACCC will identify to the court any cooperation provided by a party and take this cooperation into account when making a recommendation as to a penalty or sanction. When assessing the extent and value of the cooperation, the ACCC will consider:
- the timeliness of the cooperation;
- the significance of the evidence provided;
- whether the party provided full, frank and truthful disclosure and continued to cooperate fully and expeditiously;
- whether the party ceased its involvement in the cartel or indicated that it will cease its involvement;
- whether the party coerced any other party to participate in the cartel;
- whether the party acted in good faith in dealings with the ACCC; and
- in the case of individuals, whether the party agreed not to use the same legal representation as the corporation by which they are or were employed.
Ultimately, the penalty or sanction imposed on cartel participants will be determined by the court.
In criminal proceedings, when determining the appropriate sentence, the court will take into account the extent to which the defendant cooperated with law enforcement agencies.
vi Discovery of surrendered materials by private litigants
As discussed in Section IV.v, immunity under the Leniency Policy does not protect the applicant from private enforcement actions. There is a risk that information disclosed to the ACCC in support of an application for leniency may be discovered by parties to private litigation.
While the ACCC undertakes to 'use its best endeavours to protect any confidential information provided by an immunity applicant', this is subject to the protected cartel information provisions of the CCA. In particular, Section 157C provides that the ACCC is not required to make discovery of documents containing protected cartel information (defined as information relating to a cartel offence and given to the ACCC in confidence) to a party to actual or prospective court proceedings. However, the ACCC may disclose such information after considering such matters as the fact that the information was provided in confidence, the safety of the informant, the fact that the disclosure may discourage future informants, and the interests of the administration of justice.
i Statutory basis for and types of liability
Individuals and corporations face both civil and criminal liability under the CCA for their involvement in cartel conduct. The criminal and civil prohibitions are the same, save for an additional fault element of 'knowledge or belief' in relation to the criminal 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 – Restrictive trade practices.
It is the CDPP that has the power to bring criminal indictments under the CCA. The ACCC will refer serious cartel matters to the CDPP.
ii Potential and typical remedies for cartel violations
Individuals face pecuniary penalties of up to A$500,000 per breach of the cartel prohibitions contained in Part IV, Division 1 of the CCA.
In addition, individuals found to have committed a cartel offence may face criminal penalties of up to A$220,000 (per breach) or up to 10 years' imprisonment.11 It is illegal for a corporation to indemnify its officers against legal costs and any financial penalty.12
The CCA prohibition against indemnification makes no distinction between claims for which no liability is found and claims for which liability is found in the same proceedings – meaning it is theoretically sufficient for the director to be found liable on one claim in a proceeding to trigger the prohibition on indemnification in respect of all legal costs – even those incurred in respect of claims for which no liability was found.
The complex and costly nature of litigation involving alleged contraventions of the cartel prohibitions serves to operate harshly or unfairly against officers involved. As a consequence, there is a risk that an officer may elect to settle with the ACCC, or give concessions, rather than fight any allegations for fear that they will personally be exposed to all costs in a civil hearing.
Finally, 'officer' has the meaning given to it under Section 9 of the Corporations Act 2001 (Cth), meaning employees and middle managers may not fall within the ambit of Section 77A of the CCA. Therefore, it appears that employees who do not fall within the definition of 'officer' can be indemnified by the company in relation to civil liabilities and legal costs.
Penalties for corporations
The maximum fine or pecuniary penalty for a corporation (per criminal cartel offence or civil contravention, whichever applies) will be the greater of the following amounts:
- A$10 million;
- three times the commercial gain derived from the anticompetitive activity; or
- where the amount of gain cannot be fully determined, 10 per cent of the group turnover in Australia.
On application, the Federal Court may impose other penalties for cartel civil contraventions or criminal offences, including:
- damages (to compensate persons who suffer loss and damage as a result) (six-year limitation period);14
- orders disqualifying a person from managing corporations;15
- non-punitive orders such as community service orders, probation orders, orders for disclosure of information or orders requiring the offender to publish an advertisement on the terms specified in the order;16 and
- the Court may make 'such orders as it thinks appropriate'. These orders may include voiding a contract or certain provisions of a contract, varying a contract or refusing to enforce all or any of the provisions of a contract.17
The following recent penalties imposed for cartel conduct should provide an indication of a 'typical penalty' for a breach:
- in 2013, A$1.35 million on Japanese cable supplier, Viscas Corporation;
- in 2014, A$8.3 million in agreed penalties against Renegade Gas Pty Ltd, Speed-E-Gas (NSW) Pty Ltd (a wholly owned subsidiary of Origin Energy Limited) and three current and former senior officers of the two companies;
- in 2014, A$3 million and A$2 million in agreed penalties against NSK Australia Pty Ltd and Koyo Australia Pty Ltd, respectively;
- in 2016, A$120,000 on the former director of the Australian Egg Corporation Limited and the former managing director of Farm Pride Foods Ltd for attempting to induce a cartel arrangement between competing egg producers;
- in 2016, A$18.6 million on Cement Australia Pty Ltd; however, the Court subsequently set aside A$1.5 million, thereby reducing the total penalty imposed to A$17.1 million. The ACCC had submitted that penalties over A$9 million were appropriate and appealed the level of penalty to the Full Federal Court in October 2017. The appeal was upheld and an increased penalty of A$20.6 million was ordered on all companies in the cartel;
- in 2016, A$18 million on Colgate-Palmolive. A fine of A$9 million was imposed on Woolworths in the same matter;
- in December 2016, the Federal Court ordered ANZ Bank to pay penalties of A$9 million earlier this year, and Macquarie Bank was ordered to pay penalties of A$6 million for attempted cartel conduct in 2011 in relation to the benchmark rate for the Malaysian ringgit;
- in June 2017, Prysmian was ordered to pay a penalty of A$3.5 million for engaging in cartel conduct in relation to the supply of high-voltage land cables. The ACCC sought a penalty of A$7 million;
- in August 2017, the Federal Court imposed a penalty of A$25 million on NYK after it pleaded guilty to its involvement in a criminal cartel;
- in October 2017, the Full Federal Court upheld an ACCC appeal, imposing a A$20.6 million penalty against Cement Australia and its related companies for giving effect to anti-competitive agreements; and
- in May 2018, the Full Federal Court ordered Japanese company Yazaki Corporation to pay A$46 million for cartel conduct, following an appeal by the ACCC. This is the highest penalty ever handed down under the CCA.
It is only the court that can impose penalties and determine their value. The ACCC is able to, and does, agree with parties the amount of penalties that will be sought from the court. In 2015, the Full Federal Court ruled that joint submissions on penalties was not permitted, which put into doubt the ACCC's ability to make joint submissions in relation to pecuniary penalties. This doubt arose as a result of the High Court decision in Barbaro,18 in which the court held that the prosecution should not nominate a sentence range in criminal sentence proceedings.
The question of whether the reasoning in Barbaro applies to civil pecuniary penalties was appealed to the High Court,19 as was the question of whether parties could make joint submissions with regulators in relation to an agreed penalty or penalty range. The High Court unanimously held that Barbaro did not apply to civil pecuniary penalties and, accordingly, parties to civil proceedings are able to submit agreed penalties to the court. Whether the court accepts them is, of course, a different matter.
In March 2018, the Organisation for Economic Co-operation and Development released a report comparing the penalties for competition law infringements between Australia, the United Kingdom, Germany, Korea and the United States. The report found that Australian penalties were comparatively lower, both in terms of average and maximum penalty. In response, the ACCC released an annual report in October 2018 stating the ACCC will 'rethink its approach to assessing the penalties that it puts to the court for breaches of competition law'.20 The ACCC chair Rod Sims has also stated: 'As I have said before, we do not want breaches of our competition law to be seen as an acceptable cost of doing business. We need penalties that will be large enough to be noticed by senior management and company boards, and also shareholders.' This new approach is evident in the penalties sought in cases heard in 2018.
vi INVESTIGATIVE POWERS
The CCA contains several far-reaching powers that the ACCC can use for investigating and gathering evidence for investigations. The ACCC will always assess cartels as a priority.
Section 155 of the CCA is the ACCC's most widely used mandatory information and evidence-gathering power. It gives the ACCC the power to require a person to provide information or documents, or to give evidence relating to a possible contravention, if the ACCC has reason to believe that a person is capable of doing so. Failure to comply with a notice is a criminal offence punishable by a fine or imprisonment,21 and there is no privilege against self-incrimination. Legal professional privilege in respect of documents is preserved.
The ACCC also has the option of seeking a warrant to conduct search and seizure operations (i.e., dawn raids). The ACCC does not generally comment on its use of search warrants, but they are most commonly used in cartel investigations. Further, the following factors indicate a likely increase in the occurrence of search warrants:
- the focus of ACCC enforcement activities on detecting and prosecuting cartels;
- the criminalisation of cartels in Australia; and
- the increasing use of search warrants by regulators internationally.
Vii PRIVATE ENFORCEMENT
i Private right of action
The CCA permits a private enforcement action in respect of a breach of the cartel provisions contained in Part IV, Division 1 of the CCA. Section 82 provides that any person who suffers loss or damage from a breach of the cartel provisions can bring a private claim for damages in the Federal Court against a party that engaged in, or was involved in, the contravening conduct.22 Furthermore, under Section 80, a private litigant may seek an injunction restraining a party from engaging in conduct that constitutes an actual or attempted breach of the cartel provisions, or an attempt to aid, abet or induce a person to contravene the cartel provisions.23
Notwithstanding these statutory provisions, the number of private enforcement actions in Australia continues to lag behind other major jurisdictions.
ii Class actions
Australia has a well-developed class action regime that operates under Part VI of the Federal Court of Australia Act 1976 (Cth) (FCA). Under the FCA regime, four cartel class actions have been commenced, all of which have settled. The most recent action, which settled for A$38 million, was brought against a number of airlines alleging the existence of a cartel to fix the price of air cargo services.24
The FCA regime provides that a class action may be commenced only if:
- seven or more persons have claims against the same person;
- the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and
- all the claims give rise to a substantial common issue of law or fact.25
In relation to the requirements for standing, under the FCA regime, a person who has a sufficient interest to commence a proceeding on his or her own behalf against another person will also have a sufficient interest to commence a class action proceeding.26
The FCA regime operates an 'opt-out' system, whereby all persons who satisfy the definition of the 'class' will be represented by the lead plaintiff in the proceedings, unless they opt out. However, in some cases the 'class' has been defined as those potential claimants who have arrangements with a certain litigation under or have engaged a particular law firm. In such instances, the definition of the 'class' becomes sufficiently narrow so that, in effect, potential claimants are required to opt in to the proceedings.
iii Calculation of damages
Damages under the CCA for a breach of the cartel provisions are compensatory in nature and, accordingly, a plaintiff may only recover actual loss or damage suffered.27 Punitive or exemplary damages are not available. Further, there is a causal requirement that the loss or damage was sustained by the other party's contravention. Where a court determines that loss or damage has been incurred, the court will be required to quantify the loss, including, where necessary, by approximation or degree.
In Australia, as no action for damages arising from a breach of the cartel provisions has proceeded to judgment, the precise methodologies by which the courts will calculate damages remain unclear. One key issue that is yet to be addressed in the cartel context is the potential availability of a pass-on defence, namely a defence to a claim for loss or damage on the basis that the plaintiff passed through any increased costs associated with the cartel conduct to its own customers.28
iv Limitation periods
An action for damages in respect of a breach of the cartel provisions must be initiated within six years of the date on which the cause of action accrued. There is no settled position in the Australian courts as to when the cause of action will accrue in cartel cases. One argument is that the cause of action will only accrue when the plaintiff becomes aware that it has suffered loss or damage as a result of the cartel conduct.29 However, on the other hand, it is argued that the cause of action accrues at the time the plaintiff suffers the loss, which is usually when the plaintiff purchases the goods or services.30
v Jurisdiction and extraterritoriality
The CCA extends the operation of the cartel provisions to any conduct engaged in outside Australia by companies incorporated or carrying on business in Australia, or by Australian citizens or persons ordinarily residing in Australia.31 However, Section 5(3) requires that before conduct outside Australia can be relied upon in private enforcement proceedings, written consent must be obtained from the minister.32 The Harper Review recognised that such consent requirements pose 'a material hurdle for private plaintiffs' and recommended they be removed.33
vi Interaction between government investigations and private enforcement
The interaction between the public and private enforcement regimes can both facilitate and frustrate private actions. A private party is not precluded from commencing a private enforcement action when the ACCC or CDPP has commenced or completed its own investigations. In fact, it is increasingly common for private enforcement actions to be triggered by high-profile ACCC proceedings.
Section 83 of the CCA provides that findings of fact made against the respondent in prior proceedings can be used as prima facie evidence of those facts in subsequent proceedings.34 Accordingly, rather than having to adduce its own evidence, a private litigant may rely on findings of fact made in a successful ACCC proceeding. However, the function of this provision may be undermined by the ACCC Immunity and Cooperation Policy, which encourages the ACCC and the respondent to settle proceedings by way of an agreed statement of facts and consent orders.35 It is unclear whether a private litigant can rely on Section 83 in relation to findings based on admissions in settled proceedings, as distinct from findings based on evidence. In addition, under Section 87B of the CCA, when a party has engaged in an alleged contravention of the CCA (including the cartel provisions), the ACCC may accept a formal undertaking by the party. However, an undertaking does not require an admission that the party contravened the CCA, and accordingly cannot be relied upon under Section 83 by a private litigant.
Obtaining evidence is a significant challenge for private litigants. While the ACCC has wide-ranging investigative powers to gather evidence, it has adopted a highly restrictive stance on the disclosure of such information to private litigants. Under the CCA, where evidence is deemed to be 'protected cartel information', the ACCC has broad power to refuse to comply with a private litigant's request for information.
VIII CURRENT DEVELOPMENTS
After years of civil prosecutions for cartel conduct, the CDPP has a criminal conviction for a cartel and has commenced criminal proceedings against a number of corporates and executives. In early 2018, the ACCC indicated that cartel conduct would continue to be a priority, with 'three to four' domestic firms to face criminal prosecution in 2018. The ACCC lived up to this statement.
Notably, the ACCC's new focus on targeting individuals represents a significant change in policy – in 2017, the ACCC chair Rod Sims stated: 'Unfortunately, I fear that only jail sentences for individuals in prominent companies will help send the appropriate deterrence messages that cartels seriously damage competition and the enemy as a whole.' The ACCC will continue to focus on criminal cartel prosecutions during the next five years, and is likely to seek greater penalties than those handed down previously.
The revised joint venture exception with additional requirements is now in place. Although provided in its application, including to a collective acquisition, the term 'reasonably necessary' has significant uncertainty in terminology; time will tell as to how the courts will apply the term.
1 Prudence J Smith is a partner, and Matthew Whitaker, Timothy Atkins and Lachlan Green are associates at Jones Day.
2 Section 155 of the Competition and Consumer Act 2010 (Cth) [CCA].
3 CCA, Section 135A.
4 CCA, Sections 45AO and 45AP.
5 Australian Competition and Consumer Commission [ACCC], ACCC Immunity and Cooperation Policy, September 2014 (under review).
6 Commonwealth Director of Public Prosecutions, Prosecution Policy of the Commonwealth, Annexure B: Immunity from Prosecution in Serious Cartel Offences, September 2014.
7 ACCC v. Air New Zealand Limited  FCA 1157, .
8 ACCC v. PT Garuda Indonesia Ltd  FCAFC 42, –.
9 Capital Imaging Associates, P.C. v. Mohawk Valley Medical Associates, Inc. 996 F.2d 537, 542-43 (2nd Circ 1993); State Oil Co. v. Khan, 522 V.S.3, 10 (1997); Timken Roller Bearing Co. v. United States, 593, 598 (1951).
10 Australian Competition and Consumer Commission, 'Updated Immunity Policy to uncover cartel conduct' (Media Release, MR 225/14, 10 September 2014), www.accc.gov.au/media-release/updated-immunity- policy-to-uncover-cartel-conduct.
11 CCA, Section 79.
12 CCA, Section 77A.
13 CCA, Section 80.
14 CCA, Section 82.
15 CCA, Section 86E.
16 CCA, Section 86C.
17 CCA, Section 87.
18 Barbaro v. The Queen; Zirilli v. The Queen  HCA 2 (12 February 2014).
19 Construction, Forestry, Mining and Energy Union v. Director, Fair Work Building Industry Inspectorate & Anor  HCA 46 (2015) ALR476, 9 December 2015.
20 ACCC, 'ACCC Annual Report 2017-2018' (October 2018) p. 61.
21 CCA, Section 155(7).
22 CCA, Section 82(1).
23 CCA, Section 80.
24 De Brett Seafood Pty Ltd v. Qantas Airways Ltd (No. 7)  FCA 979.
25 Federal Court of Australia Act 1976 (Cth) [FCA], Section 33C.
26 FCA, Section 33D.
27 CCA, Section 82(1).
28 Caron Beaton-Wells, 'Private Enforcement of Competition Law in Australia – Inching Forwards?' (2016), Melbourne University Law Review Vol. 39, pp. 681, 726.
29 Caron Beaton-Wells, 'Private Enforcement of Competition Law in Australia – Inching Forwards?' (2016), Melbourne University Law Review Vol. 39, p. 693.
31 CCA, Section 5(1).
32 CCA, Section 5(3). The definition of minister is derived by reference to Section 19A of the Acts Interpretation Act 1901 (Cth). The ministers 'administering' the CCA can be ascertained by reference to the Administrative Arrangements Order, made by the Governor-General and notified in the gazette. Ministerial appointments to administer particular portfolios are also made by the Governor-General and are notified in the gazette, but a court would not normally require such details to be proven.
33 Caron Beaton-Wells, 'Private Enforcement of Competition Law in Australia – Inching Forwards?' (2016), Melbourne University Law Review Vol. 39, pp. 681, 700.
34 CCA, Section 83.
35 ACCC, 'ACCC Immunity and Cooperation Policy for Cartel Conduct' (Policy Document, September 2014) (under review).