The Australian Competition and Consumer Commission (ACCC) is responsible for enforcing the Competition and Consumer Act 2010 (CCA) and helping to prevent anti-competitive conduct. This work involves detecting and deterring domestic and international cartels operating in Australia or affecting Australians.
We explore the key points set out in the ACCC immunity and cooperation policy for cartel conduct.
What is a cartel?
The ACCC defines cartel conduct as any of the following forms of conduct engaged in by parties that are, or would otherwise be, in competition with each other:
(a) price fixing, or
(b) restricting outputs in the production and supply chain, or
(c) allocating customers, suppliers or territories, or
(d) bid rigging.
Cartels harm consumers, businesses and the economy by increasing prices, reducing choice or distorting the ordinary processes of innovation and product development. They adversely affect domestic and international competitiveness and ultimately result in reduced employment opportunities for Australians.
Immunity and cooperation policy
Effective immunity and cooperation policies encourage businesses and individuals to disclose cartel behaviour, and this in turn assists the ACCC in their work. These policies also act to discourage the formation of cartels, as potential participants will perceive a greater risk of ACCC detection and court proceedings.
Cartel participants may seek both civil and criminal immunity in respect of cartel conduct. In both cases, applications are made to the ACCC. The ACCC is responsible for granting civil immunity, whilst the Commonwealth Director of Public Prosecutions (CDPP) is responsible for granting criminal immunity.
Civil immunity may be granted to both corporations and individuals. When the ACCC receives an application for immunity, it will be assessed against a number of criteria.
A corporation / individual will be eligible for conditional immunity from ACCC-initiated civil proceedings where:
- the corporation is or was a party to a cartel / the individual is or was a director, officer or employee of a corporation that is or was party to a cartel
- the corporation admits that its conduct in respect of the cartel may constitute a contravention or contraventions of the CCA / the individual admits that it has participated in such conduct
- the corporation / individual is the first party to apply for immunity in respect of the cartel
- the corporation / individual has not coerced others to participate in the cartel
- the corporation / individual has either ceased its involvement in the cartel or indicates to the ACCC that it will cease its involvement in the cartel
- the corporation’s admissions are a truly corporate act (as opposed to isolated confessions of individual representatives)
- the corporation / individual has provided full, frank and truthful disclosure, and has cooperated fully and expeditiously while making the application, and undertakes to continue to do so, throughout the ACCC’s investigation and any ensuing court proceedings, and
At the time the ACCC receives the application, the ACCC has not received written legal advice that it has reasonable grounds to institute proceedings in relation to at least one contravention of the CCA arising from the conduct in respect of the cartel.
If a corporation qualifies for conditional immunity, 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.
In addition to satisfying the standard eligibility requirements listed above, a related corporate entity will be eligible for derivative immunity if for all or part of the relevant period of the cartel conduct:
- the corporation that qualifies for conditional immunity had a controlling interest in the related corporate entity, or
- the related corporate entity was the parent company of (or held a controlling interest in) the corporation that qualifies for conditional immunity.
The Commonwealth Director of Public Prosecutions (CDPP) is responsible for the prosecution of offences relating to cartel conduct.
Should the ACCC consider that the applicant is eligible for conditional civil immunity, it may make a recommendation to the CDPP to grant criminal immunity, however the CDPP will exercise independent discretion when considering such a recommendation.
Where the CDPP considers that the applicant meets the criteria set out in Annexure B to the Prosecution Policy of the Commonwealth, as a first step it will ordinarily provide a letter of comfort to the applicant.
The letter of comfort recognises that the applicant has ‘first-in-status’, and states that the CDPP Director intends to grant an undertaking pursuant to section 9(6D) of the DPP Act to the applicant prior to any prosecution being instituted provided that the applicant:
- maintains eligibility criteria for conditional civil immunity (as outlined above)
- provides full, frank and truthful disclosure, and cooperates fully and expeditiously on a continuing basis throughout the ACCC’s investigation and any ensuing civil or criminal proceedings, and
- maintains confidentiality regarding its status as an immunity applicant and details of the investigation and any ensuing civil or criminal proceedings unless otherwise required by law or with the written consent of the ACCC.
The letter of comfort from the CDPP will generally be provided to the immunity applicant at the same time as the ACCC grants conditional civil immunity.
Revocation of immunity
In some circumstances the ACCC may consider that the applicant has breached conditions of immunity. Where the applicant is not able to sufficiently alleviate these concerns, the ACCC may advise the applicant in writing that they no longer qualify for immunity, and make a recommendation to the CDPP that criminal immunity subject to conditions also be revoked.
General Cooperation policy
Parties not eligible for ‘first-in’ immunity may still wish to cooperate with the ACCC in its investigations. As a matter of general principle the courts afford more lenient treatment to persons who cooperate with the ACCC in its investigations and provide assistance in court proceedings.
Cooperation can be provided by corporate or individual parties, and the value of the cooperation may be taken into consideration in both civil and criminal matters. In some instances, it may be appropriate for the cooperating party to engage directly with the CDPP.
Further information concerning cooperation in relation to cartel conduct is provided in the ACCC policy.