Antitrust Alert: Now Businesses Should Assess Their Exposure in Australia
In a series of developments, the Australian Competition regulator (the ACCC) has cemented its reputation as an aggressive regulator of the competition laws. In just the last few weeks, the ACCC has obtained tens of millions of dollars in penalties for violations of the Australian competition statute. It also has succeeded in its appeal against two members of an international air freight price fixing cartel. The ACCC has long had extensive powers to investigate and punish infractions of the competition statute, but the agency now is demonstrating its intent to use these powers, and companies found to have been in breach are paying handsomely.
The ACCC announced its enforcement priorities for 2016: "deterring cartel conduct continues to be a major focus for the ACCC," and "place priority on conduct and practices that are likely to substantially lessen competition." The ACCC has 20 open investigations into collusion and about that many open investigations into anticompetitive conduct. The ACCC's increased appetite for investigation and enforcement serves as a timely reminder for companies to assess their compliance with the Australian competition statute and reflect on their level of competition risk.
Below we have outlined some of the ACCC's recent investigatory and enforcement efforts.
$18.6m in penalties against Cement Australia
In 2008 the ACCC brought proceedings against Cement Australia, four related corporate entities, and two individuals. The ACCC accused the companies of entering into agreements with the purpose or effect of substantially lessening competition in the cement market. In April 2016, the Federal Court ordered Cement Australia and its related corporate entities to pay a penalty of AUD $18.6m and also ordered a Cement Australia manager to pay a AUD $20,000 penalty.
$18m in penalties against Colgate-Palmolive, with more penalties in the offing
In December 2013, the ACCC commenced proceedings against Colgate-Palmolive, PZ Cussons, Woolworths Limited and a former Colgate-Palmolive sales director. The ACCC accused them of entering into clandestine arrangements designed to limit the supply and control the price of consumer laundry detergent. In April 2016, the Federal Court ordered Colgate-Palmolive and its former sales director to pay AUD $18m and AUD $75,000 in penalty, respectively, and the former sales directors has been disqualified from managing a company for 7 years. Serving as a warning of the serious implication of merely sharing confidential and competitively sensitive material with competitors, the Court imposed $6 million of the penalty for their sharing confidential information with its competitors. The ACCC's case against PZ Cussons and Woolworths will go to trial in June 2016.
Air Cargo appellate victory
In March 2016 the Full Court of the Federal Court of Australia upheld an appeal by the ACCC, finding that PT Garuda (Indonesia) and Air New Zealand had engaged in price fixing. This represents a significant appellate victory for the ACCC, only time will tell if this is the end, as either of the two airlines may seek special leave to appeal before the High Court.
Between 2008 and 2010, the ACCC commenced proceedings against 15 international airlines, alleging they had entered into price fixing arrangements on air cargo entering Australia. Thirteen of those airlines ultimately settled with the ACCC, with payments totaling AUD $98.5m. Neither Garuda nor Air New Zealand settled, and in October 2014 the Federal Court dismissed the ACCC's case against the two airlines (see our November 2014 alert on this decision), finding that the conduct had not occurred in an Australian "market." The ACCC's appeal was premised on the argument that the contravening conduct took place in a 'market in Australia,' and the majority of the Full Court agreed (for further information see our May 2016 Antitrust alert ). The Full Court have remitted the matter to the Federal Court to determine the quantum of penalties payable by Garuda and Air New Zealand, which likely will be significant.
ACCC appeal egg cartel decision
In May 2014, the ACCC commenced proceedings against three individuals and three companies in the hen egg industry. The ACCC alleged that, during a meeting organized by the industry association, competitors discussed colluding to limit the supply of eggs to the market (by destroying eggs or culling hens). In February 2016, the Federal Court of Australia dismissed the ACCC's claims against five corporate respondents (see our April 2016 alert) but in April the court ordered the association's former director to pay AUD $120,000 in penalties, for working to procure a cartel arrangement. The ACCC has appealed the decision to dismiss the remaining five respondents.
The ACCC's vigorous investigatory and enforcement efforts are emblematic of a nascent hard-line culture within the ACCC. Companies should take this opportunity to review their compliance with the Competition and Consumer Act 2010 (Cth) and assess their competition risk.
For more information, please contact your principal Jones Day representative or either of the lawyers listed below.
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