In a series of developments, the Australian Competition
regulator (the ACCC) has cemented its reputation as an aggressive
regulator of the competition laws. In just the last few weeks, the
ACCC has obtained tens of millions of dollars in penalties for
violations of the Australian competition statute. It also has
succeeded in its appeal against two members of an international air
freight price fixing cartel. The ACCC has long had extensive powers
to investigate and punish infractions of the competition statute,
but the agency now is demonstrating its intent to use these powers,
and companies found to have been in breach are paying
handsomely.
The ACCC announced its enforcement priorities for 2016:
"deterring cartel conduct continues to be a major focus for
the ACCC," and "place priority on conduct and practices
that are likely to substantially lessen competition." The ACCC
has 20 open investigations into collusion and about that many open
investigations into anticompetitive conduct. The ACCC's
increased appetite for investigation and enforcement serves as a
timely reminder for companies to assess their compliance with the
Australian competition statute and reflect on their level of
competition risk.
Below we have outlined some of the ACCC's recent investigatory
and enforcement efforts.
$18.6m in penalties against Cement Australia
In 2008 the ACCC brought proceedings against Cement Australia, four
related corporate entities, and two individuals. The ACCC accused
the companies of entering into agreements with the purpose or
effect of substantially lessening competition in the cement market.
In April 2016, the Federal Court ordered Cement Australia and its
related corporate entities to pay a penalty of AUD $18.6m and also
ordered a Cement Australia manager to pay a AUD $20,000
penalty.
$18m in penalties against Colgate-Palmolive, with more
penalties in the offing
In December 2013, the ACCC commenced proceedings against
Colgate-Palmolive, PZ Cussons, Woolworths Limited and a former
Colgate-Palmolive sales director. The ACCC accused them of entering
into clandestine arrangements designed to limit the supply and
control the price of consumer laundry detergent. In April 2016, the
Federal Court ordered Colgate-Palmolive and its former sales
director to pay AUD $18m and AUD $75,000 in penalty, respectively,
and the former sales directors has been disqualified from managing
a company for 7 years. Serving as a warning of the serious
implication of merely sharing confidential and competitively
sensitive material with competitors, the Court imposed
$6 million of the penalty for their sharing confidential
information with its competitors. The ACCC's case against PZ
Cussons and Woolworths will go to trial in June 2016.
Air Cargo appellate victory
In March 2016 the Full Court of the Federal Court of Australia
upheld an appeal by the ACCC, finding that PT Garuda (Indonesia)
and Air New Zealand had engaged in price fixing. This represents a
significant appellate victory for the ACCC, only time will tell if
this is the end, as either of the two airlines may seek special
leave to appeal before the High Court.
Between 2008 and 2010, the ACCC commenced proceedings against 15
international airlines, alleging they had entered into price fixing
arrangements on air cargo entering Australia. Thirteen of those
airlines ultimately settled with the ACCC, with payments totaling
AUD $98.5m. Neither Garuda nor Air New Zealand settled, and in
October 2014 the Federal Court dismissed the ACCC's case
against the two airlines (
see our November 2014 alert on this decision), finding that the
conduct had not occurred in an Australian "market." The
ACCC's appeal was premised on the argument that the
contravening conduct took place in a 'market in Australia,'
and the majority of the Full Court agreed (
for further information see our May 2016 Antitrust alert []).
The Full Court have remitted the matter to the Federal Court to
determine the quantum of penalties payable by Garuda and Air New
Zealand, which likely will be significant.
ACCC appeal egg cartel decision
In May 2014, the ACCC commenced proceedings against three
individuals and three companies in the hen egg industry. The ACCC
alleged that, during a meeting organized by the industry
association, competitors discussed colluding to limit the supply of
eggs to the market (by destroying eggs or culling hens). In
February 2016, the Federal Court of Australia dismissed the
ACCC's claims against five corporate respondents (
see our April 2016 alert) but in April the court ordered the
association's former director to pay AUD $120,000 in penalties,
for working to procure a cartel arrangement. The ACCC has appealed
the decision to dismiss the remaining five respondents.
Implications
The ACCC's vigorous investigatory and enforcement efforts are
emblematic of a nascent hard-line culture within the ACCC.
Companies should take this opportunity to review their compliance
with the Competition and Consumer Act 2010 (Cth) and
assess their competition risk.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.