$2 million penalty for cartel conduct

Tuesday 22 October 2013 @ 10.48 a.m. | Trade & Commerce

The Federal Court has made orders by consent against Koyo Australia Pty Ltd ordering it to pay penalties of $2 million following action by the Australian Competition and Consumer Commission (ACCC).

The Case

The Court found that in 2008 and 2009, Koyo Australia made and gave effect to two separate cartel arrangements with two of its competitors to increase the price of ball and roller bearings to their after-market customers.

Bearings are an essential component in products such as motor vehicles, mining conveyors, household electrical items and farm machinery.
ACCC Chairman Rod Sims said:

“Detecting, stopping and deterring domestic and international cartels is a priority for the ACCC...Cartels not only cheat consumers and other businesses, they also restrict healthy economic growth. It is crucial for the proper functioning of business in Australia that the ACCC continues to tackle cartel conduct with the full force of the law.”

In relation to the penalty amount, the Court said:

"The discount for Koyo’s co-operation and Koyo’s acknowledgement of liability should be meaningful so that it can be seen that, were it not for its admissions now and co-operation, the Court would impose a significantly increased penalty if liability was established following a contested trial.”

The Court has also made orders restraining Koyo Australia from engaging in similar cartel conduct for a period of three years and requiring it to implement a competition and consumer law compliance training program.
Mr Sims said “If you know of, or are involved in a cartel, the best course of action would be to speak to the ACCC and cooperate fully”.

Definition of "cartel conduct"

Cartel conduct is defined in s 44ZZRD (Div 1 of Pt IV) of the Competition and Consumer Act 2010 (Cth), as including four forms of activity:

  • price fixing;
  • market division;
  • restricting outputs; and
  • bid rigging.

This conduct is prohibited where made or given effect to in a "contract, arrangement or understanding" and two or more of the parties involved are competitors (or would be but for the conduct). In relation to price fixing the provision must have the "purpose or effect" of price fixing; in relation to the other forms of conduct the provision must have the requisite "purpose". Price fixing is defined in the same way in s 44ZZRD as it was in the former s 45A.

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.

Sources:

Related Articles: