Practical implementation of criminal sanctions for serious cartel conduct has now come a step closer with the release of the final version of the Memorandum of Understanding between the Australian Competition and Consumer Commission and the Commonwealth Director of Public Prosecutions.
The Memorandum allocates each agency a defined role in relation to the conduct of investigations into cartel conduct, prosecutions, and management of the process of granting immunity from proceedings, and comes into effect once the Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2008, introduced into Parliament on 3 December 2008, is enacted.
What cartel conduct will be treated as criminal?
The ACCC will retain primary responsibility for conducting investigations into alleged cartel conduct and gathering evidence. As part of this process, the ACCC will consider whether the conduct uncovered is serious enough to require referral to the DPP for consideration on criminal prosecution.
Only cartel conduct which can cause large-scale or serious economic harm will be referred to the DPP. In deciding this, the ACCC will have regard to factors such as whether:
- the conduct was longstanding and had, or could have, a significant impact on the market in which the conduct occurred
- the conduct caused, or could cause significant detriment to the public, or to one or more customers of the alleged participants in the cartel
- one or more participants has previously been found to be involved in a cartel
- the value of the commerce affected exceeded, or would exceed, $1 million within a 12 month period; or
- in the case of bid-rigging, the value of the bid, or series of bids, exceeded $1 million within a 12 month period.
These factors provide an indication of what the ACCC views "serious cartel conduct" to be. The ACCC may seek advice from the DPP as to whether the conduct is serious enough to prosecute criminally.
Director of Public Prosecutions' role
On referral, the DPP must decide whether a criminal prosecution should be commenced, a decision which is made with regard to:
- the impact of the cartel on the market
- the scale of the detriment caused to consumers or the public; and
- whether one or more participants has previously been found to be involved, or has admitted involvement, in a cartel.
Should proceedings be commenced, the DPP retains responsibility for prosecution of the offences, and will also seek associated remedies, such as those available under the Proceeds of Crime Acts 1987 and 2002.
Simultaneous criminal and civil proceedings
The Memorandum acknowledges that some matters may be prosecuted both civilly and criminally, but expressly states that the agencies will ensure that "measures" are adopted to avoid civil proceedings adversely affecting a related criminal investigation or prosecution. Those "measures" are not outlined in the Memorandum.
Immunity for whistleblowers
The Memorandum indicates that all applications for immunity, whether in relation to criminal prosecutions or civil proceedings, should be directed to the ACCC. The ACCC will retain responsibility for deciding whether the applicant should be granted immunity from civil proceedings in accordance with its published and current immunity policy.
The DPP will have responsibility for deciding whether immunity from criminal proceedings should also be granted in accordance with the Annexure to the Prosecution Policy of the Commonwealth.
However, the two agencies will consult with one another in relation to these decisions where the matter concerns a criminal investigation or prosecution. A recommendation from the ACCC to the DPP that immunity from prosecution should be granted will be considered by the DPP when exercising its discretion to grant immunity from criminal proceedings.
Of significant practical importance is that the decision of the DPP on whether to grant immunity will be communicated to the applicant at the same time as the ACCC's decision on whether to grant conditional immunity from civil proceedings.
Immunity from criminal proceedings will be conditional on full, ongoing, co-operation with the DPP and, with respect to an individual, will be conditional on the individual:
- appearing as a witness for the prosecution in criminal proceedings; and
- providing evidence truthfully and accurately.
Revised ACCC Immunity Policy
In conjunction with the Memorandum, the ACCC has issued an updated version of its Immunity Policy, under which it will grant immunity from civil proceedings.
Under the revised Policy the ACCC will grant conditional immunity to corporations where an application is made for immunity which meets the policy criteria.
Final immunity will only be provided after resolution of any proceedings, although the ACCC in its discretion may grant final immunity at any earlier stage. In contrast to the 2005 Immunity Policy, applicants will now be required to undertake to provide ongoing full disclosure and co-operation to the ACCC in order to retain conditional immunity status.
Where corporate immunity is granted, executives or employees who admit involvement in respect of the cartel will also be eligible for derivative immunity. However, to achieve this, corporations will now be required, on application, to list all employees who seek immunity.
Individuals may also seek immunity from civil proceedings on the same terms. Like corporate applicants, individuals will now be obliged to undertake to fully disclose and co-operate with the Commission in order to retain conditional immunity.
While these amendments do not fundamentally change the Immunity Policy, greater emphasis is being placed on complete co-operation with the Commission in this most recent version.
It is clear that the Memorandum and Annexure to the Prosecution Policy of the Commonwealth contemplate that, while retaining separate roles, each agency will co-operate with the other in managing the investigation and prosecution of serious cartel conduct. This consultative process is intended to produce consistency in the approach taken, on a case-by-case basis, to serious cartel conduct and criminal proceedings, once the Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2008 is enacted.