The combatting of corporate cartel conduct is a key responsibility of the Australian Competition & Consumer Commission (ACCC), which aims to prevent harmful side-effects of this activity such as increased prices and a reduction in choice through enforcement of the Competition and Consumer Act 2010 (CCA).
An immunity and cooperation policy (the “Policy”) provides incentives to businesses and individuals to disclose illegal behaviour, and discourages the formation of cartels. In the Policy, the ACCC outlines the key criteria for corporations and individuals to obtain conditional immunity from cartel conduct.
Civil immunity
Civil immunity is available only for the first party to disclose the cartel conduct, who also meets the eligibility criteria as outlined below. Parties not eligible for immunity (because they are not the first to disclose the conduct or because they do not meet the criteria) may seek to cooperate with the ACCC under its Cooperation Policy.
Civil immunity may be granted in the form of corporate, derivative or individual immunity.
Corporate immunity
In order for a corporation to be eligible for conditional immunity, it must satisfy the following criteria:
- they must admit that they have engaged in cartel conduct which may constitute a contravention of the CCA
- they are the first party to apply for immunity in respect of the cartel
- they have not coerced others to participate in the cartel
- they have ceased or indicate they will cease involvement in the cartel
- the admissions are a truly corporate act
- they have provided full, frank and truthful disclosure and have cooperated fully and expeditiously while making the application
- they have entered into a cooperation agreement
- they continue to maintain confidentiality regarding their status as an immunity applicant and details of the investigation
Derivative immunity
Derivative immunity may relate either to corporations or to individuals, with slightly varying eligibility criteria for each.
Corporate derivative immunity
If a corporation qualifies for conditional immunity as per the above, it may seek derivative immunity for related corporate entities and/or for current and former directors, officers and employees of the corporation who were involved in the cartel conduct.
A related corporate entity will be eligible for derivative conditional immunity from ACCC-initiated civil proceedings if is satisfies all the above corporate immunity criteria, in addition to the following:
for all or part of the relevant period of the cartel:
(i) the corporation that qualifies for conditional immunity had a controlling interest in the related corporate entity, or
(ii) the related corporate entity was the parent company of (or held a controlling interest in) the corporation that qualifies for conditional immunity, or
(iii) both the corporation that qualifies for conditional immunity and the related corporate entity had a common parent company with a controlling interest in both corporations.
Individual derivative immunity
An individual will be eligible for conditional immunity if they:
- are a current/former director, officer or employee of the corporation
- admit their involvement in the conduct of the corporation in respect of the cartel
- have not coerced others to participate in the cartel
- have ceased or indicate they will cease involvement in the cartel
- have provided full, frank and truthful disclosure and have cooperated fully and expeditiously while making the application
- have entered into a cooperation agreement
- continue to maintain confidentiality regarding their status as an immunity applicant and details of the investigation
Individual immunity
An individual will be eligible for conditional immunity if they:
- are a current/former director, officer or employee of the corporation
- admit that they have engaged in cartel conduct which may constitute a contravention of the CCA
- are the first party to apply for immunity in respect of the cartel
- have not coerced others to participate in the cartel
- have ceased or indicate they will cease involvement in the cartel
- have provided full, frank and truthful disclosure and have cooperated fully and expeditiously while making the application
- have entered into a cooperation agreement
- continue to maintain confidentiality regarding their status as an immunity applicant and details of the investigation
General notes
The following applies to civil, derivative and individual immunity:
- Generally, the ACCC will not grant immunity if, at the time an application is received, the ACCC is already in possession of evidence that is likely to establish at least one contravention of the CCA (whether civil or criminal), arising from the cartel conduct.
- In order to maintain conditional immunity once granted, the relevant party must comply with the terms of the cooperation agreement
- Subject to the applicant meeting the conditions for final immunity, conditional civil immunity will become final immunity after the resolution of any ensuing proceedings, including appeals, against cartel participants who do not have conditional immunity.
Criminal immunity
The Commonwealth Director of Public Prosecutions (CDPP) is responsible for prosecuting offences relating to cartel conduct. The CDPP and ACCC work together to facilitate the granting of immunity in relation to criminal cartel offences at the same time as immunity in relation to civil proceedings.
Where the ACCC is satisfied that the applicant meets the eligibility criteria for immunity, it will recommend to the CDPP that immunity from prosecution be granted. The CDPP does however have independent discretion when considering a recommendation by the ACCC.
Once an immunity recommendation has been communicated by the ACCC to the CDPP, as a first step the CDPP will ordinarily provide a letter of comfort to the applicant. The letter of comfort recognises that the applicant has ‘first-in’ status and that they will be considered for immunity so long as they continue to maintain the eligibility criteria for conditional immunity and provide complete and ongoing cooperation in all relevant investigations and proceedings.
In our next article, we cover the 7 key steps in the immunity process, including obtaining final immunity.
