20 Dec 2018

Australian cartel immunity update – ACCC quietly expands its immunity policy to apply to a concerted practice

By Michael Corrigan, Alexander Vial

A recent change to the ACCC's Cartel Immunity Policy confirms that it applies to both cartel conduct and a concerted practice. This should provide potential immunity applicants with some comfort where their conduct can possibly be characterised as both or either cartel conduct and a concerted practice.

This month the ACCC amended its Immunity and Cooperation Policy for Cartel Conduct to include the possibility of "first in" conditional immunity being available for a concerted practice as well as for cartel conduct and anticompetitive agreements,  arrangements, and understandings.  In November 2017, the prohibition against engaging in a concerted practice having a purpose or effect or likely effect of substantially lessening competition was introduced in Australia.

This extension of the Cartel Immunity Policy to a concerted practice brings the ACCC's Policy in line with similar immunity policies in other jurisdictions including in the UK, the EU, Singapore, and Hong Kong.  It addresses a gap in the Policy that had existed since the concerted practice law was adopted, that was causing a number of practical and legal issues in immunity matters in Australia.

The framework of Australia's cartel laws

The new Australian law prohibiting a concerted practice can, according to the Government's guidance on the amending Bill and the ACCC's guidelines, also apply to conduct that may contravene Australia's cartel laws.

This risk of dual exposure to both laws created practical issues for an immunity applicant.  If the conduct under consideration for disclosure to the ACCC could contravene the law as both a cartel and concerted practice, the applicant would only be offered "first in" immunity for cartel conduct and not for any civil fine for a concerted practice (with the latter immunity not being determined until some future time).

This naturally created uncertainty for corporate applicants and their employees, and undermined the incentives to seek first in immunity.  The civil fines for a concerted practice are the same for cartel conduct (note, however, cartel conduct may also be treated as a criminal matter).

Australia's cartel laws require that competitors made an agreement, arrangement or arrived at an understanding with each other.  Australian case law in this area has persistently emphasised that some form of commitment or mutual obligation between competitors is necessary to satisfy this requirement (even for an "understanding"). 

In recent years, the ACCC has failed to win a number of cases where competitors allegedly shared or signalled prices, ideas, or information but were not shown to have reached any commitments how to proceed.[1]

As a result of the ACCC's push for law reform and the Harper Review which identified the lack of a concerted practice prohibition as a "gap" in the law, the law prohibiting a concerted practice was introduced to catch information exchanges and signalling of pricing and other intentions between competitors.

The Cartel Immunity Policy only recently changed to keep up with changes to the Act

The recent change to the Cartel Immunity Policy is welcome and should assist applicants for immunity and their advisers to have more confidence over the terms on which immunity may be available if they meet the various conditions. It is also timely as the Australian Government has given the ACCC an additional $35 million to investigate and prosecute anticompetitive conduct.

While the changes outlined have been made to the Cartel Immunity Policy, the ACCC has also publicly stated that it is in the process of reviewing its policies and that it expects to publish revised policies in "early 2019".

The ACCC has publicly consulted on a draft revision and foreshadowed requiring applicants to enter into more formal cooperation agreements to confirm their obligations to provide full co-operation to the ACCC and the Commonwealth Director of Public Prosecutions.

Recently, the ACCC has also begun to insist that any co-operating employees be separately represented from the immunity applicant and to require that the ACCC have the right to interview those employees without the immunity applicant's counsel being present.

This trend has added to the cost and uncertainty of the immunity process. It remains unclear whether these changes will have any effect on the willingness of parties to avail themselves of the Cartel Immunity Policy.


[1] Eg. Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd [2007] FCA 794, (2007) 160 FCR 321; Australian Competition and Consumer Commission v Australian Egg Corporation Ltd [2017] FCAFC 152, (2017) 254 FCR 311; Australian Competition and Consumer Commission v Olex Australia Pty Ltd [2017] FCA 222  Back to article

 

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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.