Cartel immunity policy review: Discussion paper released by ACCC
Tuesday 1 October 2013 @ 10.47 a.m. | Corporate & Regulatory | Trade & Commerce
In a media release posted 30 September 2013 the Australian Competition and Consumer Commission (ACCC) has advised that it has released for public discussion a paper inviting public comment on various key issues arising from its review of Immunity Policy for Cartel Conduct. The ACCC sees an immunity program as being very important to its operation and as a result has indicated that it "regularly reviews the effectiveness of its immunity policy" and that it had commenced its latest review earlier this year.
Background to the Policy
The ACCC published a revised Compliance and Enforcement Policy in February 2013 setting out priorities that the ACCC focuses on in its compliance and enforcement work. That policy states that "cartel conduct will always be assessed as a priority, irrespective of the sector of the economy in which the activity occurs" and that every allegation of cartel conduct will be "closely assessed" by the ACCC to determine whether it should be subject to enforcement action.
Nature of Cartels
In its policy on how cartels are formed, the ACCC say they are formed when "competitors enter into a contract, arrangement or understanding that they will act in a certain way".
The policy identifies four "broad categories" of conduct possibly constituting a cartel. The conduct involves competitors colluding to:
- fix the price of goods or services
- restrict outputs in the production and supply chain
- allocate customers, suppliers or territories, or
- rig bids
The policy says that harm comes to consumers, businesses and the economy from cartels because they increase prices, reducing choice or distort the ordinary processes of innovation and product development. Cartels can also "increase input prices, adversely affect domestic and international competitiveness and ultimately result in reduced welfare for Australians and businesses operating in Australia".
Reason for a Cartel Immunity Policy
An cartels immuntiy policy is required according to the ACCC because - "Cartels are often systematic, deliberate and most importantly, covert". The members of cartels generally go to great lengths to keep their conduct secret and as a result the detecting of cartels can be more difficult than for other forms of corporate based misconduct. Agencies like the ACCC require effective tools to "detect, deter and punish this conduct" and to this end the ACCC asserts in its policy that:
"Domestic and international experience has demonstrated that an effective immunity policy encourages self-reporting of cartel conduct by participants. The threat of detection destabilises existing cartels and deters the formation of new cartels."
The ACCC however also points out that "[A]n immunity policy is not designed to offer a reward to ‘good corporate citizens’. It is a detection tool designed to deliver benefits to all Australians by identifying, stopping and prosecuting harmful and illegal behaviour."
Reason for review
Following on an initial consultation the ACCC states that it is now seeking comments on a range of issues which are intended to inform the drafting of revised policy materials, including:
- streamlining the processes of granting civil and criminal immunity by utilising a letter of comfort from the Commonwealth Director of Public Procesutions (CDPP) regarding criminal immunity
- clarification of the terms ‘clear leader’ and ‘coercion’ in assessing a party’s eligibility for immunity
- clarification of how cooperation by second and subsequent parties to the cartel will be assessed by the ACCC
- simplifying the format of the policy.
Submissions are due by 28 October 2013 and can be made online or by email, details are here.
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