What is cartel conduct?Cartel Conduct

A cartel occurs when businesses agree to act together instead of competing. The agreement is designed to increase the profits of cartel members. Cartels are prohibited under the Competition and Consumer Act 2010 (Cth). Under this Act, business and individuals participating in cartels may be committing both civil and criminal offences.

Cartel conduct is a type of white collar crime and can include:

  • Price fixing: when competitors agree on the price of a product.
  • Sharing markets: when competitors agree to divide or allocate customers and markets.
  • Rigging bids: where suppliers agree among themselves who will win and at what price.
  • Output restrictions: Controlling the amount of goods and services available to buyers.

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.



Under s79 of the Competition and Consumer Act:

Individuals who attempt to contravene, aid contravention, conspire to contravene or knowingly contravene cartel offence provisions may face up to 10 years imprisonment, a fine of 2,000 penalty units (currently AUD$420,000), or both.

Corporations currently face the same criminal penalties as they do under civil proceedings; however, directors, officers and employees involved in the cartel conduct are punished according to the above.


Possible defences

Although the newest amendments to the Competition and Consumer Act have toughened Australia’s stance on corporate cartels, there has been some reprieve through the expansion of the “joint ventures” defence.

Previously, this defence was only available if the cartel provision was explicitly stated in the contract of the joint venture.  Since the amendments have come into effect, the defence is now available if the cartel provision is contained within the parties’ “contract, arrangement or understanding”.

In addition, the legitimate purposes for a joint venture have also been expanded.  The amended provision now allows joint ventures for the “acquisition of goods and services”. Initially, the joint venture defence was only available for the “production of goods” and the “supply of goods and services”.

Through the expansion of the joint ventures defence, corporations with less formal business connections will now have the opportunity to defend themselves against prosecution in relation to corporate cartel allegations.


Requirements to qualify for the defence

While the amendments have expanded the available defence, they have also increased the number of elements that must be met for business dealings to quality as a joint venture and be eligible for the joint ventures defence.

In defending criminal charges, the cartel provision must be “for the purposes of a joint venture” and must be “reasonably necessary for undertaking the joint venture”.  Additionally, the defendant bears the burden of proof in such matters.

In defending civil charges, the joint venture must “not be carried on for the purpose of substantially lessening competition”.

These requirements attempt to ensure the legislation strikes a balance between the criminalisation of corporate cartels and allowing the necessary business dealings of corporations to continue.


Who investigates and prosecutes cartel conduct?

The Australian Competition and Consumer Commission (ACCC) is responsible for enforcing the Competition and Consumer Act and helping to prevent anti-competitive conduct. This work involves detecting and deterring domestic and international cartels operating in Australia or affecting Australians.

While the ACCC investigates cartel matters, the Commonwealth Director of Public Prosecutions (CDPP) is responsible for prosecuting such cases.

The Federal Court of Australia has jurisdiction for civil matters arising under the Act and exclusive jurisdiction in respect of criminal proceedings.

The State and Territory Courts have jurisdiction to deal with certain offences as well as examinations and commitment for trial on indictment.


Immunity and cooperation policies

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.

Being the first party to report corporate cartel conduct is required to obtain civil/criminal immunity. Where this is not possible, fully cooperating with the ACCC (and CDPP, where applicable) can still result in greater leniency by the courts.

To learn more, explore the seven key steps towards immunity.


Is there a right of appeal?

Individuals and corporations charged with cartel conduct are afforded the right of appeal.  If an appeal is lodged, the case will be re-heard in front of the Full Court of the Federal Court of Australia, which has three or more sitting judges at any time.  Further appeals can only occur when the High Court of Australia grants leave.

In addition to an appeal on liability, defendants also have a right to appeal against the penalty imposed.


International cartels

Given the global nature of cartel conduct and the focus by regulators on multi-nationals, it is important to consider any cross-border issues that may arise when attempting to enforce Australian law.  Currently, s5 of the Competition and Consumer Act limits extraterritorial enforcement to conduct engaged in outside Australia by:

  • Bodies corporate incorporated or carrying on business within Australia,
  • Australian citizens, and
  • Persons ordinarily resident within Australia.

64 countries have come together to form the Cartel Working Group which forms part of the International Competition Network. The Working Group facilitates international assistance in relation to enforcement for cartel matters.


How can we help?

We provide expert advice and representation to individuals and companies who are being investigated for corporate crime, including engaging in cartel conduct.

Contact us if you require assistance.