Australian Cartel Regulation: Law, Policy and Practice in an International Context

Contents......Page 10
About the authors......Page 22
Preface......Page 24
Acknowledgements......Page 26
Abbreviations......Page 30
1.1 Why focus on anti-cartel law and enforcement?......Page 34
1.2 A new anti-cartel regime for Australia – background......Page 36
1.3 Aims, scope and structure of this book......Page 40
2.2 Outline of the statutory regime......Page 43
2.3.1 Entity coverage......Page 46
2.3.2 Territorial coverage......Page 47
2.3.3 Temporal coverage......Page 51
2.4.1 Flaws in the dishonesty proposal......Page 52
2.4.1.3 The test for dishonesty is uncertain and vulnerable to unmeritorious denials of liability......Page 53
2.4.1.4 A dishonesty element does not accurately label or signal the subject matter of cartel offences......Page 55
2.4.2 Unworkability of suggested alternatives......Page 56
2.4.3.1 Both civil and criminal prohibitions suffer from overreach and uncertainty......Page 58
2.4.3.2 The criminal and civil prohibitions are inadequately distinguished......Page 60
2.4.3.3 Determination of seriousness should not be left substantially to prosecutorial discretion and/or sentencing......Page 61
2.4.4 A more comprehensive and systematic approach......Page 64
2.5 Conclusion......Page 67
3.1 Introduction – the law in flux on collusion......Page 69
3.2 A spectrum of dealings......Page 72
3.3 Conceptual boundaries......Page 76
3.4.1 The approach taken in the US and the EU......Page 80
3.4.2 Equating -understanding’ with -concerted practice’?......Page 85
3.5 Evidentiary considerations......Page 91
3.5.1 Problems with the ACCCs 2007 list of proposed factual matters......Page 92
3.5.2 Additional complications......Page 98
3.6 Meaning of -makes’ a contract or arrangement, -arrives at’ an understanding or -gives effect to’ a provision......Page 100
3.6.2 -Gives effect to’......Page 101
3.6.2.2 Meaning of -gives effect to’......Page 102
3.7 Parties to a contract, arrangement or understanding......Page 104
3.8 Conclusion – the need for clarity and restraint in defining collusion......Page 106
4.1 Introduction – the pivotal element of a provision......Page 108
4.2 Classification of provisions......Page 109
4.2.1 Basic economic principles relevant to classification......Page 110
4.2.2 The US approach to classification......Page 112
4.2.3 The EU approach to classification......Page 116
4.2.4 The Australian approach to classification......Page 119
4.3 Price-fixing provisions......Page 122
4.3.1.1 Purpose......Page 123
4.3.1.2 Effect or likely effect......Page 126
4.3.2.1 Fixing......Page 128
4.3.2.2 Maintaining......Page 129
4.3.2.3 Controlling......Page 130
4.3.2.4 Providing for......Page 132
4.3.3 Goods or services supplied or acquired, or likely to be supplied or acquired, by the parties to the contract, arrangement or understanding, or re-supplied, or likely to be re-supplied, by persons or classes of persons supplied or likely to be supplied by any or all of the parties......Page 133
4.4 Exclusionary provisions......Page 135
4.4.1 Nature of the exclusionary purpose......Page 137
4.4.2 Object(s)
of the exclusionary purpose......Page 138
4.4.3 Reform proposals......Page 141
4.5 Output restriction provisions......Page 144
4.5.1 Output restriction purpose......Page 145
4.5.2 Production, capacity and supply......Page 147
4.5.2.1 Production......Page 148
4.5.2.3 Supply......Page 149
4.6 Market allocation provisions......Page 151
4.6.1 Market allocation purpose......Page 152
4.6.2 Allocation......Page 153
4.7 Bid-rigging provisions......Page 154
4.7.1 Bid-rigging purpose......Page 155
4.7.2 Joint bidding......Page 158
4.8 SLC provisions......Page 160
4.9 Conclusion – the need for reformulation underpinned by a more principled and more flexible approach......Page 164
5.1 Introduction – the cartel offences and their physical and fault elements......Page 168
5.2.2 Fault concepts......Page 170
5.2.3 Coverage and application of the fault elements......Page 172
5.3.1 Intention to make a contract or arrangement or arrive at an understanding......Page 173
5.4.1 The subject matter that must be known or believed......Page 175
5.4.2 Knowledge......Page 176
5.4.3 Belief......Page 178
5.4.4 'Wilful blindness’......Page 180
5.4.5 Knowledge or belief as to the purpose of the cartel provision alleged......Page 183
5.4.6 Degree of detail of which D must be aware......Page 184
5.5.1 Ignorance or mistake of fact......Page 185
5.5.2 Ignorance or mistake of law......Page 186
5.6 Fault elements applicable in relation to a -cartel provision’ as reformulated in Chapter 4......Page 188
5.7.1 The complexity of the cartel offences and the failure to reverse engineer their elements on the basis of conceivably workable jury directions......Page 189
5.7.2 Towards model jury directions......Page 190
6.1 Introduction – the symbol of jail and illusions of individual accountability......Page 191
6.2.1 The basis for individual liability for cartel conduct as a principal party......Page 192
6.2.2.1 Introduction......Page 193
6.2.2.2 Individual liability for cartel conduct as a principal party for allowing or authorising cartel conduct......Page 194
6.2.3 Individual liability for cartel conduct as a principal on the basis of vicarious responsibility......Page 198
6.3 Individual liability for complicity in cartel conduct......Page 200
6.3.1 The various bases of liability for complicity in cartel conduct......Page 201
6.3.2.1 Introduction......Page 202
6.3.2.2 Liability for complicity on the basis of an omission to intervene......Page 203
6.3.3 Fault elements of individual liability for complicity in cartel conduct on the basis of personal responsibility......Page 206
6.3.3.1 Fault elements of liability for aiding, abetting, counselling or procuring......Page 207
6.3.3.2 Fault elements of being knowingly concerned in a cartel offence or contravention......Page 208
6.3.3.3 Fault elements of complicity in relation to the fault elements of the principal offence or contravention......Page 209
6.3.3.4 Fault elements of complicity in relation to the type of principal offence or contravention committed......Page 211
6.3.3.5 Fault elements of complicity in relation to the mode of commission of the principal offence or contravention......Page 212
6.3.4 Liability for complicity in cartel conduct on the basis of vicarious responsibility......Page 214
6.3.6 Simplifying and otherwise improving the definition of complicity in cartel conduct......Page 215
6.4.1 The thicket of inchoate liability for cartel conduct......Page 217
6.4.2 Double inchoate liability......Page 218
6.5.1 Shut-eyed sentries and the -insulated conductor’ stratagem......Page 219
6.5.2 A difficult challenge......Page 222
6.6.1 Introduction – corporate versus individual accountability......Page 224
6.6.2 Individual accountability for cartel conduct and enforcement discretion......Page 225
6.6.3 Individual accountability for cartel conduct and corporate internal disciplinary systems......Page 228
6.6.4 Individual accountability for cartel conduct, corporate liability and efficiency......Page 231
6.7 Sidewinder liability......Page 232
6.7.1.1 TPA ss 155(5) and 154R(2)......Page 233
6.7.1.2 Criminal Code offences......Page 234
6.7.1.4 Offences of concealing or compounding a cartel offence......Page 235
6.7.2.1 Money-laundering offences......Page 236
6.7.2.2 Forfeiture orders......Page 237
6.7.3.2 Supporting a criminal organisation......Page 238
6.7.3.3 Directing an activity of a criminal organisation......Page 239
6.8 Conclusion – towards solutions and away from black magic......Page 240
7.1.1 Overview of the TPA provisions relating to corporate liability for cartel conduct......Page 242
7.1.2 Pressure testing the principles and rules relating to corporate liability......Page 245
7.2.1 Profoundly suspect individualistic conceptions of liability for cartel conduct......Page 246
7.2.2 Inability of methodological individualism to explain corporate action and corporate responsibility......Page 247
7.2.3 Heroic assumptions about the deterrent capability of individual criminal liability......Page 249
7.2.5 Retributive punishment of corporations and corporate fault......Page 251
7.2.7 Conclusion as regards the policy of corporate criminal liability for cartel conduct......Page 253
7.3.1 Various rules govern corporate capacity to be held liable under Pt IV of the TPA......Page 254
7.3.2 A corporation must be of the type required for corporate liability under the TPA......Page 255
7.3.3 An unincorporated association is not subject to corporate liability under the TPA......Page 256
7.3.4 Governmental authorities are subject to liability so far as they carry on a business......Page 257
7.3.5 A corporation is not liable for conduct committed before incorporation or before or after dissolution but a successor corporation may be liable for the conduct of a predecessor corporation......Page 260
7.4.2 Should the general principle of corporate fault under the Criminal Code have been excluded from the cartel offences?......Page 262
7.4.3 Corporate negligence under s 12.4 of the Criminal Code......Page 265
7.4.4 Limiting the application of s 84(1) and (2) to cartel offences
where the director, employee or agent acted with intent to benefit
the corporation......Page 266
7.4.5 A defence of corporate reasonable precautions and due diligence......Page 267
7.4.5.1 A defence of corporate reasonable precautions and due diligence – too easy to establish?......Page 268
7.4.5.2 A defence of corporate reasonable precautions and due diligence – an insufficient incentive to prevent the commission of cartel offences?......Page 271
7.4.5.3 A defence of corporate reasonable precautions and due diligence – an unjustified departure from the general principle requiring proof of criminal liability beyond a reasonable doubt?......Page 272
7.4.6 Can vicarious responsibility be imposed in relation to a subjective fault element by combining the mental states of a number of representatives to create a collective construct of intention, purpose, knowledge or belief?......Page 273
7.4.7 To what extent does vicarious responsibility extend to unauthorised conduct?......Page 275
7.4.8 Does vicarious responsibility extend to the conduct and fault of a subsidiary corporation?......Page 277
7.5.1 Looking beyond the humanoid model of cartel conduct under the TPA......Page 279
7.5.2 Corporateness and the concept of a concerted practice under EU competition law......Page 280
7.5.3 Repeated cartel conduct and the concept of the -whole cartel’......Page 281
7.5.4 Corporate ancillary liability......Page 282
7.5.5 Corporate ratification and reactive disregard of cartel conduct......Page 283
7.6.1 Whose state of mind counts as that of a corporation where an exception requires a state of mind?......Page 286
7.6.2 A solution......Page 288
7.7 Conclusion – towards greater recognition of the corporateness of corporate cartel conduct......Page 289
8.1 Introduction – the importance of exceptions under the anti-cartel legislation and their current state of disarray......Page 292
8.2.1 Related corporations......Page 295
8.2.2 Dual listed companies......Page 297
8.2.3 Partnerships......Page 299
8.3.1 The joint venture exceptions......Page 300
8.3.2.1 -Joint venture’......Page 303
8.3.2.2 The requirement under ss 44ZZRO and 44ZZRP that the joint venture be -for the production and/or supply of goods or services’......Page 306
8.3.3 The requirement of a contract or contract proxy......Page 307
8.3.3.1 Retrospective application of the contract requirement......Page 308
8.3.3.2 Umbrella joint venture contracts......Page 309
8.3.3.3 Pre-contractual joint venture arrangements or understandings......Page 312
8.3.3.4 Contract proxy requirement that each party have the requisite intention and reasonable belief......Page 313
8.3.3.5 The contract requirement is an ineffective response to the problem of sham joint ventures......Page 314
8.3.4.1 Obscurities persist......Page 315
8.3.4.2 The -purposes of the joint venture’......Page 317
8.3.4.3 -For the purposes of a joint venture’......Page 320
8.3.4.4 The need or otherwise for a competition test as an element of a joint venture exception......Page 324
8.3.4.5 Creating a new exception for collaborative ventures between competitors......Page 325
8.3.5 Conclusion as regards the joint venture exceptions......Page 328
8.4.1 Collective bargaining......Page 329
8.4.2 Collective acquisition and joint advertising......Page 331
8.5.1 The anti-overlap exceptions......Page 332
8.5.2 Exclusive dealing exceptions......Page 333
8.5.3 Acquisition of shares or assets exceptions......Page 334
8.5.4 Resale price maintenance exceptions......Page 335
8.6.1 The failure of the TPA to exclude economically beneficial or innocuous supply agreements between competitors from the operation of the cartel prohibitions......Page 336
8.6.3 Input supply agreements containing a cartel provision that is not covered by any exception other than authorisation......Page 337
8.6.5 A specific exception for supply agreements between competitors......Page 340
8.7.1 The exception under s 51(2)(c)......Page 342
8.7.2 The main issues in standard-setting that have yet to be addressed and how they should be addressed......Page 343
8.8.1 The exceptions under s 51(3)......Page 345
8.8.2 The need for and the implications of fundamentally reassessing the relationship between intellectual property rights and cartel prohibitions......Page 347
8.9.1 The s 51(2)(g) exception......Page 349
8.9.2 Does the s 51(2)(g) exception have a cogent rationale?......Page 350
8.10.1 The Pt X exemptions......Page 351
8.10.2 Are the Pt X exemptions justified?......Page 353
8.11 Underwriting arrangements and funding syndicates......Page 354
8.12 Settlement of litigation......Page 355
8.13.1 Authorisation under s 88......Page 357
8.13.2 Conduct preliminary to a grant of authorisation......Page 359
8.13.3 The role of authorisation......Page 360
8.14.1 Withdrawal under the TPA – navigating the maze......Page 361
8.14.2 Withdrawal and criminal or civil liability as a principal for making a contract or arrangement or arriving at an understanding containing a cartel provision or exclusionary provision......Page 362
8.14.3 Withdrawal and criminal or civil liability as a principal for giving effect to a cartel provision or exclusionary provision......Page 363
8.14.5 Withdrawal and criminal or civil liability for complicity in a cartel offence or breach of a civil prohibition against cartel conduct......Page 364
8.14.6 Withdrawal and criminal or civil liability for conspiracy to commit a cartel offence or conspiracy to contravene a civil prohibition against cartel conduct......Page 365
8.15 Honest and reasonable conduct that ought fairly to be excused......Page 366
8.16 De minimis conduct......Page 367
8.17 Conclusion – the need for functional reconstruction......Page 368
9.1 Introduction – the role of enforcement policy in an anti-cartel regime......Page 370
9.2 The ACCCs Compliance and Enforcement Policy......Page 371
9.3 The ACCC–CDPP MOU, ACCC Investigation Guidelines and CDPP Prosecution Policy......Page 374
9.3.1 Agency roles......Page 375
9.3.2 Decision-making criteria......Page 381
9.3.2.1 Investigation......Page 382
9.3.2.2 Referral......Page 385
9.3.2.3 Prosecution......Page 391
9.3.3 Dual proceedings......Page 395
9.3.3.1 The statutory protection under s 76B......Page 396
9.3.3.2 The meaning of -substantially the same’ conduct......Page 397
9.3.3.3 Concurrent versus sequential proceedings......Page 398
(a) Criminal proceedings that result in a conviction......Page 401
(b) Criminal proceedings that do not result in a conviction......Page 402
(a) Civil proceedings that result in a finding of a contravention......Page 404
(b) Civil proceedings that do not result in a finding of a contravention......Page 406
9.4 Conclusion – the need for policy consolidation and extension......Page 408
10.1 Introduction – the role of immunity and cooperation policies in anti-cartel law enforcement......Page 411
10.2.1 Immunity policy......Page 413
10.2.1.1 Immunity from civil proceedings......Page 416
10.2.1.2 Immunity from criminal proceedings......Page 421
10.2.2 Cooperation Policy......Page 425
10.2.2.1 Cooperation in civil proceedings......Page 427
10.2.2.2 Cooperation in criminal proceedings......Page 431
10.2.2.3 The Canadian approach to cooperation policy......Page 436
10.3 Immunity and cooperation policies and private enforcement......Page 438
10.3.1 The ACCCs traditional approach to disclosure......Page 440
10.3.2 The -PCI’ scheme......Page 443
10.3.2.1 Section 157C......Page 445
10.3.2.2 Section 157B......Page 447
10.3.3.1 US......Page 448
10.3.3.2 EU......Page 450
10.4 Conclusion – a call for a more coherent and effective approach......Page 452
11.1 Introduction – inadequacies and uncertainties in sanctions design and application......Page 454
11.2 The statutory scheme governing sanctions for cartel conduct......Page 456
11.3.1 Level of pecuniary penalties against corporations......Page 457
11.3.2.1 Approach to -negotiated’ penalties......Page 466
11.3.2.2 Impact of -negotiated’ penalties......Page 469
11.3.3 Approach to penalty assessment......Page 471
11.3.3.1 Base fine......Page 473
11.3.3.2 Adjustments for aggravating and mitigating factors......Page 476
11.3.3.3 Conclusions regarding the approach to penalty assessment......Page 478
11.3.4 Penalty maxima based on benefit and turnover......Page 479
11.3.4.1 The benefit maximum......Page 480
11.3.4.2 The turnover maximum......Page 483
11.3.5.1 Alternatives to monetary penalties under the TPA......Page 486
11.3.5.2 Probation orders......Page 488
11.3.5.3 Community service orders......Page 490
11.3.5.4 Information disclosure orders and advertisement orders......Page 492
11.3.5.5 Adverse publicity orders......Page 493
11.3.6 Level of pecuniary penalties against individuals......Page 495
11.3.7 Disqualification orders......Page 497
11.3.7.1 Rationale for disqualification orders......Page 498
11.3.7.2 Length of disqualification orders......Page 499
11.3.7.3 Effectiveness of disqualification orders......Page 502
11.3.8 Ban on indemnification......Page 503
11.4.1 State of federal sentencing law......Page 505
11.4.2 Approach to sentencing for cartel offences......Page 506
11.4.3 Sentencing purposes......Page 508
11.4.4.1 Proportionality......Page 511
11.4.4.2 Totality......Page 514
11.4.4.3 Parity......Page 515
11.4.5 Sentencing factors......Page 516
11.4.5.1 The nature and circumstances of the offence......Page 518
11.4.5.2 Other offences (if any) that are required to be taken into
account......Page 520
11.4.5.4 The personal circumstances of any victim of the offence......Page 521
11.4.5.5 Any loss, injury or damage resulting from the offence......Page 522
11.4.5.6 The degree to which the person has shown contrition for the offence......Page 525
11.4.5.7 If the person has pleaded guilty to the charge in respect of the offence – that fact; and the degree to which the person has cooperated with law enforcement agencies in the investigation of the offence or of other offences......Page 526
11.4.5.9 The need to ensure that the person is adequately punished for the offence......Page 529
11.4.5.10 The character, antecedents, cultural background, age, means and physical or mental condition of the person......Page 530
11.4.5.12 The probable effect that any sentence or order under consideration would have on any of the persons family or dependants......Page 531
11.4.5.13 Factors specific to the sentencing of corporations......Page 532
11.4.6.2 Fines......Page 534
11.4.6.3 Imprisonment......Page 538
(a) Suspended sentences......Page 540
(b) Fixing the non-parole period......Page 541
(c) Concurrent and cumulative sentences......Page 543
11.4.6.4 Dismissals, discharges and releases......Page 545
11.4.6.5 State and territory options......Page 547
11.4.6.7 Other TPA options......Page 548
11.5 The relationship between private actions and the public enforcement regime......Page 550
11.5.1 Restitution as a condition of immunity......Page 551
11.5.2 Impact of ACCC settlements on private follow-on actions......Page 555
11.5.3 Compensation as a relevant factor in setting penalties......Page 557
11.6.1 Civil sanctions......Page 560
11.6.2 Criminal sanctions......Page 562
11.6.3 The relationship between private actions and public sanctions......Page 565
12.1 Introduction – corporate implications of the anti-cartel legislation for compliance and liability control......Page 566
12.2.1 Compliance......Page 569
12.2.2 Liability control......Page 576
12.3.2 Giving effect to a cartel or other provision......Page 581
12.3.3 Cartel provisions and other provisions......Page 582
12.3.4 Fault elements of the cartel offences......Page 584
12.3.6 Corporate liability......Page 585
12.3.7 Exceptions......Page 587
12.3.8 Sidewinder liability......Page 588
12.4.1 Identifying the opportunities......Page 589
12.4.2 Commitment to avoid commitment......Page 592
12.4.3 Facilitating practices......Page 593
12.4.4 JV Ultra-Lights......Page 595
12.4.6 Insulation of senior managers via the insulated conductor stratagem......Page 596
12.5 Conclusion – the implications of a liability control framework......Page 597
13.1 Reflecting on the aims of this book......Page 600
(b) Multiple objects and matching modes of enforcement......Page 601
(g) Corporate accountability......Page 602
(j) Effective sanctions......Page 603
13.3.1 A comprehensive framework......Page 604
13.3.2 Multiple objects and matching modes of enforcement......Page 605
13.3.3 Rules reflecting economic seriousness......Page 606
13.3.4 Fault-based liability......Page 607
13.3.6 Individual accountability......Page 608
13.3.7 Corporate accountability......Page 609
13.3.9 Immunity and cooperation policy......Page 610
13.3.10 Effective sanctions......Page 611
13.3.11 Compliance and liability control......Page 612
13.4 Managing the future of the Australian anti-cartel regime......Page 613
Appendix Trade Practices Act 1974 (Cth) Pt IV Div 1;  Pt IV Div 2 s 45......Page 616
Index......Page 634