The first individuals have been sentenced for a criminal cartel offence since cartel conduct was criminalised in 2009, as outlined in a recent ACCC media release.
Read on to learn about the conduct involved, the sentences and penalties imposed, and what the implications are for those engaging in cartel conduct.
What is cartel conduct?
A “cartel” occurs when businesses agree to collaborate instead of competing, to increase the profits of cartel members. Cartel conduct may include price fixing, sharing markets, rigging bids, and restricting output.
Case background
The sentences imposed in June 2022 relate to price fixing of the Australian dollar/ Vietnamese dong exchange rate and the transaction fees charged to customers who were sending money from Australia to Vietnam, which took place between January 2012 and August 2016.
The conduct involved individuals from Vina Money (NSW) and its competitor, money remittance business Hong Vina (VIC). Both businesses used a large Vietnamese commercial bank (Sacombank) to make payments in Vietnam on their behalf.
The Court heard evidence of communications between the two businesses and Sacombank which encouraged Vina Money and Hong Vina to agree on exchange rates instead of competing. This arrangement continued for several years.
The businesses also agreed to stop discounting their fees and charged full transaction fees in their branches.
The agencies involved
The sentences follow a joint investigation by the Australian Competition & Consumer Commission (ACCC) and the Australian Federal Police (AFP). Prosecution was conducted by the Commonwealth Director of Public Prosecutions (CDPP).
The sentences and penalties
In June 2022, the Federal Court:
- Imposed a fine on Vina Money of $1,000,000.
- Sentenced a former company secretary and director of Vina Money to imprisonment of two years and six months.
- Sentenced a second former company secretary and director of Vina Money to imprisonment of nine months.
- Sentenced former company secretary and director of Hong Vina to imprisonment of one year and seven months.
- Sentenced a former shareholder of Hong Vina to imprisonment of two years and four months.
All four individuals were released on recognisance orders to be of good behaviour, without serving time in custody.
Implications for those engaging in cartel conduct
ACCC Chair Gina Cass-Gottlieb said that “Enforcing cartel laws remains an enduring priority for the ACCC and we will continue referring serious cases of alleged cartel conduct to the CDPP for consideration for criminal prosecution. This case also shows that the links between the ACCC and AFP are increasing our effectiveness and ability to enforce cartel provisions.”
Cartel conduct carries significant potential prison sentences and fines.
For corporations, the maximum fine for each criminal cartel offence is the greater of:
- $10 million, or
- Three times the total benefit that has been obtained and which is reasonably attributable to the commission of the offence, or
- If the value of the benefit obtained cannot be determined, 10 percent of the corporation’s annual turnover connected with Australia.
An individual convicted of a criminal cartel offence may be sentenced to up to 10 years’ imprisonment and/or fined up to $444,000.
Cooperation and immunity
The ACCC has an immunity and cooperation policy whereby past or present cartel members can confess their actions and cooperate with investigations in exchange for immunity from ACCC-initiated civil and (through the CDPP) criminal proceedings.
Being the first party to report cartel conduct is required to obtain immunity. Where this is not possible, fully cooperating with the relevant agencies can still result in greater leniency by the courts.
Key takeaways
The first individuals have been sentenced for criminal cartel conduct relating to exchange rate price fixing and colluding on customer transaction fees. Four individuals were sentenced to suspended prison terms and a $1,000,000 fine was imposed on a Sydney money remittance business. This case demonstrates the successful collaboration between multiple law enforcement agencies in enforcing cartel laws, and shows that those engaging in such conduct can no longer afford to view possible penalties as simply a cost of doing business. Where cartel conduct has already been committed, full and early cooperation may lead to immunity.
