12 Sep 2014

ACCC's updated cartel immunity and co-operation policy will improve process

This week the Australian Competition and Consumer Commission released its updated immunity and co-operation policy for cartel conduct, responding to various concerns raised with the previous amnesty policy.

The changes represent an advancement of ACCC policy and are likely to improve the immunity application process in Australia.

What you need to know

The revised Policy features key amendments to the substantive requirements of immunity applications in Australia. The administrative changes will give greater transparency and practical comfort to applicants by clarifying the position of the Commonwealth Director of Public Prosecutions for criminal immunity applications, a change which we are already seeing in practice.

The new Policy also:

  • broadens the scope of participants eligible for immunity by removing the disqualifying provision for a "clear leader" of the cartel;
  • further explains the criterion that a party which coerced others to join the cartel is not eligible for immunity; and
  • clarifies the benefits of cooperating with the ACCC including via the amnesty plus arrangement.

Commonwealth Director of Public Prosecutions to provide "letters of comfort"

The dual regulatory system in Australia requires both civil and criminal immunity. Since 2009, the practice for obtaining criminal immunity required an application to be made by the ACCC to the Commonwealth Director of Public Prosecutions (CDPP) addressing the issue of immunity from criminal prosecution.

Although the ACCC typically would inform the client that the application had been made to the CDPP, in some cases, applicant would not hear back from the CDPP about the outcome of the application. One reason for this may have been the drafting of the CDPP Act, which limited the provision of formal undertakings to clearly criminal matters. This is problematic in an early stage of an immunity process, since the evidence available is often inconclusive. In any event, in our experience the lack of communication by the CDPP was a cause of significant anxiety for local and international clients alike.

The Policy improves the administrative process surrounding the application for immunity, by providing that the CDPP will write to applicants informing them of the terms and conditions of immunity.

Exclusion of immunity for "clear leaders" removed

Under the previous guide there was a disqualifying provision for a "clear leader" of the cartel. To our knowledge that disqualifying factor has never been applied by the ACCC and it was also unclear.

Under the new Policy, a party can now more confidently apply for immunity even if it was the initiating party which created the cartel or led the others in organising meetings or communications to implement the cartel's activities.

Exclusion for "coercion" retained

Despite the removal of the "clear leader" disqualification, parties who are found to have coerced others into cartel behaviour will still be excluded from the cartel immunity application process. Coercion in this context is not limited to instances of physical coercion or threats of violence, but also includes instances of commercial threats or inducements to pressurise an unwilling participant to take part in a cartel. Several examples of commercial pressure are offered in the new Policy to provide guidance on this test.

Amnesty Plus arrangement clarified

A party who is co-operating with the ACCC in relation to one cartel may discover a second cartel that is independent and unrelated to the first cartel. In these circumstances, the party may apply for conditional immunity for the second cartel and also seek "amnesty plus" for the original cartel conduct.

Previously it was not clear what additional leniency might be available for a second or later applicant on the first cartel matter notified. Now the Policy makes clear that amnesty plus involves a recommendation by the ACCC to the Court for a further reduction in the civil penalty in relation to the first cartel.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.