Australia: Shipping line fined $34.5 million for criminal cartel conduct

Last Updated: 8 August 2019
Article by Nathan Cecil and Rebecca Niumeitolu
Most Read Contributor in Australia, August 2019

The Federal Court has ordered Japanese shipping company, Kawasaki Kisen Kaisha Ltd (K-Line), to pay a fine of $35.5 million for criminal cartel conduct 1.

The criminal conduct for which K-Line entered a guilty plea occurred between about 24 July 2009 and 6 September 2012 in respect of an agreement or understanding known as the "Respect Agreement" that K-Line reached with five other shipping companies (including Nippon Yusen Kabushiki Kaisha (NYK) which was fined $25 million on 3 August 2017).

The Respect Agreement covered trade routes for 'roll-on, roll-off' cargo, mainly motor vehicles and trucks, to Australia from India, Thailand, Japan and South Korea. It contained a price fixing provision pursuant to which the parties would from time to time:

  • share information about their freight rates and proposed freight rates for customers
  • agree on freight rates and freight rate variations to be charged, bids and proposed bids for customers
  • submit bids, decline to submit bids to fix, control and maintain prices for their services and their existing market shares
  • enter contracts with customers for the supply of services on the routes to Australia which reflected the bids to the customers.

As the Federal Court observed, there was little doubt that K-Line's conduct in giving effect to the price fixing provision "had the capacity to substantially limit or distort the competitive setting of freight rates on the relevant routes to Australia, the likely result being that the rates were higher than they would have been in a competitive market". While it was difficult to quantify the extent of this market distortion, its significant impacts on the market could be appreciated in light of the sheer volume of 106,247 vehicles shipped by K-Line pursuant to contracts affected by its criminal conduct and the considerable revenue of about AU$97.4 million it earned from those shipments.

Penalty imposed

The maximum penalty for K-Line's offence was $100 million. The Court fined K-Line $34.5 million.

In determining the appropriate sentence the Court considered that factors contributing to the seriousness of K-Line's offence included that:

  • it engaged in a long-standing global cartel
  • its criminal conduct spanned longer than three years
  • its conduct impacted on a market of considerable economic importance to Australia
  • it took deliberate steps to avoid detection of the Respect Agreement, including by ensuring that communications were generally oral, and, at times, marking written correspondence "Confidential. Dispose after Reading"
  • K-Line's corporate culture facilitated its participation in the cartel in the fact of staff training in anti-trust laws
  • K-Line engaged in the cartel for its own profit and benefit.

The Court found that K-Line's cooperation with and assistance given to law enforcement agencies, its guilty plea and genuine contrition and remorse warranted a 28 per cent discount of the penalty that would otherwise have been imposed. K-Line's good prospects of rehabilitation also mitigated against the severity of its sentence.

The final sentence imposed on K-Line also took account of the sentence imposed on NYK, to avoid unjustifiable disparity between the two offenders involved in the cartel. The Court used a lower starting point for K-Line's sentence because it was a smaller company than NYK, however, the ultimate sentence for NYK was lower for reasons that included the 50 per cent discount afforded to it for its guilty plea at the earliest possible opportunity, its considerable cooperation with authorities leading up to its sentencing and its undertaking to provide future assistance to authorities.


Driving down penalties

The shipping cartel that K-Line was engaged in had been on foot since at least February 1997, although it only became liable to criminal sanction in Australia on 24 July 2009.

As a result of the wide-reaching and global impact of the cartel, K-Line has been fined or otherwise ordered to pay about AU$68.3 million by the Japan Fair Trade Commission, about AU$77.3 million by the United States of America, about $61.4 million by the European Commission and about AU$5.1 million by China's National Development and Reform Commission. K-Line and one of its subsidiaries have also been ordered to pay about AU$8.38 million by the Federal Economic Competition Commission of Mexico with further proceedings in South Korea, Chile and South Africa yet to be finalised or on appeal.

Notwithstanding the significant nature of these foreign fines and payment orders, the Court afforded them limited weight in the present sentencing. This was because they related to different transgressions in foreign jurisdictions and primarily concerned civil and administrative proceedings rather than criminal proceedings, as was the case here in Australia.

The judgment emphasises that ultimately, the key factors driving down sentences where an accused pleads guilty are entry of its plea at the earliest opportunity and cooperation with authorities. This appears to be the principal factor that reduced K-Line's sentence.

Be careful about your cooperation

The Competition and Consumer Act 2010 (Cth) heavily regulates the type of commercial activities that parties can engage in with their competitors and unilaterally that would have the purpose, effect or likely effect of substantially lessening competition in the market. That said, Part X provides certain exemptions for shipping lines to coordinate their services and freight rates, provided that they enter and register their conferencing agreements.

K-Line was party to one liner conference agreement, but its conduct in this case fell outside of the scope of that agreement and the exemptions under Part X.

Whilst K-Line acted deliberately in its cartel conduct, the case nevertheless reminds shipping lines to ensure that their activities fall within permissible competition limits. As this and NYK's sentences show us, getting caught is simply not worth it! This is particularly so where the Courts are likely to use sentencing to deter other cartel conduct due to the notorious difficulties in detecting, investigating and prosecuting such conduct.


1 Commonwealth Director of Prosecutions v Kawasaki Kisen Kaisha Ltd [2019] FCA 1170.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions