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06 Sep 2019

ACCC's amended Australian cartel immunity change now excludes concerted practices – so self-report carefully

Michael Corrigan, Elizabeth Richmond, Alexander Vial, and Shirley-Anne Hu

If you are considering self-reporting potential cartel conduct or a concerted practice, seek legal advice to ensure your business is fully aware of the implications of the ACCC's revised Cartel Immunity Policy, including the potential for exposure to a penalty or sentence.

From 1 October 2019, the ACCC's Immunity and Cooperation Policy for Cartel Conduct will no longer entitle a party to apply for cartel immunity for engaging in a concerted practice, and there are more stringent conditions for a party to obtain immunity for cartel conduct, following changes introduced on Friday 6 September 2019, which also create some ambiguity in the Policy.

The Cartel Immunity Policy will only enable a party to apply for immunity in relation to:

  • making a contract or arrangement, or arriving at an understanding that contains a cartel provision or giving effect to a cartel provision. A cartel provision involves price fixing, bid rigging, output restrictions or market sharing; and
  • making a contract or arrangement, or arriving at an understanding that the purpose, effect or likely effect of substantially lessening competition.

In most cases, these changes to the Cartel Immunity Policy will make the decision on whether a party should contemplate making an application to the ACCC for a grant of immunity more difficult and complex. If you apply for immunity and if your conduct is found to be merely a concerted practice, you will not be guaranteed "first in" immunity and may be at risk of legal action or investigation despite self-reporting.

If you are considering self-reporting potential cartel conduct or a concerted practice, seek legal advice to ensure your business is fully aware of the implications of the ACCC's revised Cartel Immunity Policy, including the potential for exposure to a penalty or sentence.

The immunity policy no longer applies to a concerted practice

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. After just over a year later, the ACCC amended its Cartel Immunity Policy to include the availability of "first in" conditional immunity for a concerted practice, as well as for cartel conduct and anticompetitive agreements and understandings.

This has now been reversed, meaning a party can no longer apply under the Immunity Policy for immunity in respect of a concerted practice. As the ACCC states in its revised Cartel Immunity Policy:

"The Policy does not apply to parties engaged in a concerted practice. If the ACCC forms the view that the conduct reported by an applicant seeking immunity under this Policy is not cartel conduct, but may comprise an anti-competitive concerted practice, conditional immunity will not be granted."

Australia is the only jurisdiction to have a concerted practices carve out in its cartel immunity policy. This brings Australia out of alignment with immunity policies in other jurisdictions including in the UK, the EU, Singapore, and Hong Kong.

What if conduct could be both cartel conduct and a concerted practice?

Parties that decide to self-report conduct that may be characterised as a concerted practice in the alternative to cartel conduct now need to apply under the ACCC Cooperation Policy for Enforcement Matters. The ACCC states in its Cooperation Policy that:

"Recognition of such cooperation and assistance takes a variety of forms, for example, complete or partial immunity from action by the Commission, submissions to the court for the reduction in penalty or even administrative settlement in lieu of litigation."

Accordingly, immunity is available for a concerted practice as a matter of discretion but immunity is only one of various options available to the ACCC under its Cooperation Policy. Any relief granted by the ACCC under its Cooperation Policy will require a number of conditions to be satisfied, including that the applicant:

  • comes forward with valuable and important evidence of a contravention of which the ACCC is otherwise unaware or has insufficient evidence to initiate proceedings;
  • upon its discovery of the breach, takes prompt and effective action to terminate its part in the activity;
  • provides the ACCC with full and frank disclosure of the activity and all relevant documentary and other evidence available to it, and cooperates fully with the ACCC's investigation and any ensuing litigation.

The resulting ambiguity — "grey area" cases

The ACCC's new Cartel Immunity Policy appears to be intended to discourage immunity applications in cases where the applicant wishes to obtain comfort from the ACCC that the conduct is not sufficiently serious to amount to cartel conduct.

This gives rise to complicated "grey area" cases, including those where it is not clear whether the conduct is cartel conduct, an anticompetitive agreement which substantially lessens competition, or a concerted practice. This is acknowledged in paragraph 8.4 of the ACCC’s Guidelines on Concerted Practices, which also notes that conduct may fall under both categories.

As a result, if conduct only amounts to a concerted practice, cartel immunity will be refused under the new Cartel Immunity Policy and the ACCC can investigate the applicant for the concerted practice conduct. This is a risk that prospective applicants should keep in mind.

New requirements to obtain cartel immunity

There are a number of new requirements an applicant must meet before cartel immunity is granted under the revised Cartel Immunity Policy. These include providing the ACCC with:

  • a certificate in writing at the end of the evidence gathering phase that the applicant has fully complied with its obligations under the Cartel Immunity Policy, including having conducted all searches and provided all relevant witnesses, information and documents to the ACCC within its power, custody or control;
  • signed statements from relevant witnesses (and the ACCC may consider that the proffer stage is not completed until these are provided);
  • a signed cooperation agreement in order to be eligible for conditional immunity. A cooperation agreement sets out a timetable acceptable to the ACCC of the initial cooperative steps that the applicant agrees to undertake to satisfy its obligations under the policy;
  • an admission that the applicant is engaging in, or has engaged in cartel conduct, whether as a principal or in an ancillary capacity, and that the conduct may contravene the CCA.

Increased risks where a marker is withdrawn

The ACCC has also revised its policy in relation to investigating conduct in circumstances where a marker lapses or is withdrawn, conditional immunity is not granted by the ACCC, or a marker is otherwise cancelled.

The revised Cartel Immunity Policy states:

"the ACCC may use such information indirectly to further the ACCC’ s investigation, including to gather evidence that could be used against the applicant, any derivative immunity applicants, or any other party, in civil proceedings and/or criminal prosecutions under the CCA."

Previously, it was not open to the ACCC to do this.

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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.