Status: Bill (introduced 3 December 2008)
Amends
Cartel laws
Trade Practices Amendment
(Cartel Conduct and Other Measures)
Bill 2008
Bill links
Bill - 3 December
Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2008 (Bill Home Page)
Exposure Draft - 27 October 2008
Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2008 (Government web site)
Press Release announcing Bill
Chris Bowen MP (Assistant Treasurer and Minister for Competition Policy and Consumer Affairs) - released 27 October 2008
Original Exposure Draft - January 2008
Criminal Penalties for Serious Cartel Conduct – Draft Legislation
This was the original exposure draft bill for criminalising cartel conduct; this site contains this original bill, the Government's discussin paper and submissions to the inquiry regarding the proposed criminal cartel laws.
Background and progression
In January 2008 an Exposure Draft Bill was released proposing to introduce criminal penalties for cartel conduct and also to re-define cartel conduct. This Bill originally included a proposal for a maximum term of imprisonment for individuals of up to five years and applied only where it could be demonstrated conduct was entered into with the intention of dishonestly obtaining a benefit.
After public comment, on 27 October 2008 the Assistant Treasurer and Minister for Competition Policy and Consumer Affairs, Mr Chris Bowen MP, released the new Exposure Draft Bill, the Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2008 . Key features of the new Bill include:
* Maximum imprisonment of up to 10 years (with the US, the highest currently available)
* No requirement to have the intention of dishontestly obtaining a benefit
* Re-defined cartel provisions to bring them more in line with existing civil provisions
The Government introduced this bill into the House on 3 December. On 4 December the Senate referred the bill to the Senate Standing Committee on Economics for report by 20 February 2009.
Summary
Cartel offence
The bill makes it an offence to make or give effect to a contract, arrangement or understanding between competitiros that contains a provision to fix prices, restrict outputs, divide or share markets, or rig bids. The key provisions are section 44ZZRD (Cartel provisions), section 44ZRF (Making a contract etc containing a cartel provision) and section 44ZZRG (Giving effect to a cartel provision). These are set out below. The relevant fault elements are those provided under the Criminal Code (intention and knoweldge or belief).
Penalties
For individuals - up to 10 years imprisonment and/or fine of up to $220,000 (why this is lower than the pecuniary penalty available for a civil contravention remains a mystery) (see s 79)
For corporations - same as the existing pecuniary penalty but int he form of a fine. See sections 44ZRF and 44ZZRG
Civil Prohibitions
The new civil prohibtions will now be identical to the criminal offences, save that the civil prohibition will not require the criminal 'fault' element and the burden of proof will not be 'beyond reasonable doubt'. To prevent double jeapardy the Government has indicated that it will enable civil penalties to be postponed until the completion of criminal penalties.
Joint Venture Defence
A defence to both criminal and civil actions will be available where parties involved are - or will be - carrying on a JV to produce or supply goods or services and the cartel provision is for purposes of that JV - burden of proof is on the parties: see sections 44ZZRO and 44ZZRP.
Key provisions
Section 6(5A)
Despite anything in section 44ZZRF or 44ZZRG, if a body corporate other than a corporation is convicted of an offence against that section (as that section applies because of this section), the offence is taken to be punishable on conviction as if the body corporate were a corporation.
Section 6(5B)
Despite anything in section 44ZZRF or 44ZZRG, if a person other than a body corporate is convicted of an offence against that section (as that section applies because of this section), the offence is taken to be punishable on conviction by a term of imprisonment not exceeding 10 years or a fine not exceeding 2,000 penalty units, or both.
Section 44ZZRD Cartel provisions
(1) For the purposes of this Act, a provision of a contract, arrangement or understanding is a cartel provision if:
(a) either of the following conditions is satisfied in relation to the provision:
(i) the purpose/effect condition set out in subsection (2);
(ii) the purpose condition set out in subsection (3); and
(b) the competition condition set out in subsection (4) is satisfied in relation to the provision.
Purpose/effect condition
(2) The purpose/effect condition is satisfied if the provision has the purpose, or has or is likely to have the effect, of directly or indirectly:
(a) fixing, controlling or maintaining; or
(b) providing for the fixing, controlling or maintaining of;
the price for, or a discount, allowance, rebate or credit in relation to:
(c) goods or services supplied, or likely to be supplied, by any or all of the parties to the contract, arrangement or understanding; or
(d) goods or services acquired, or likely to be acquired, by any or all of the parties to the contract, arrangement or understanding; or
(e) goods or services re-supplied, or likely to be re-supplied, by persons or classes of persons to whom those goods or services were supplied by any or all of the parties to the contract, arrangement or understanding; or
(f) goods or services likely to be re-supplied by persons or classes of persons to whom those goods or services are likely to be supplied by any or all of the parties to the contract, arrangement or understanding.
Note 1: The purpose/effect condition can be satisfied when a provision is considered with related provisions—see subsection (8).
Note 2: Party has an extended meaning—see section 44ZZRC.
Purpose condition
(3) The purpose condition is satisfied if the provision has the purpose of directly or indirectly:
(a) preventing, restricting or limiting:
(i) the production, or likely production, of goods by any or all of the parties to the contract, arrangement or understanding; or
(ii) the capacity, or likely capacity, of any or all of the parties to the contract, arrangement or understanding to supply services; or
(iii) the supply, or likely supply, of goods or services to persons or classes of persons by any or all of the parties to the contract, arrangement or understanding; or
(b) allocating between any or all of the parties to the contract, arrangement or understanding:
(i) the persons or classes of persons who have acquired, or who are likely to acquire, goods or services from any or all of the parties to the contract, arrangement or understanding; or
(ii) the persons or classes of persons who have supplied, or who are likely to supply, goods or services to any or all of the parties to the contract, arrangement or understanding; or
(iii) the geographical areas in which goods or services are supplied, or likely to be supplied, by any or all of the parties to the contract, arrangement or understanding; or
(iv) the geographical areas in which goods or services are acquired, or likely to be acquired, by any or all of the parties to the contract, arrangement or understanding; or
(c) ensuring that in the event of a request for bids in relation to the supply or acquisition of goods or services:
(i) one or more parties to the contract, arrangement or understanding bid, but one or more other parties do not; or
(ii) 2 or more parties to the contract, arrangement or understanding bid, but at least 2 of them do so on the basis that one of those bids is more likely to be successful than the others; or
(iii) 2 or more parties to the contract, arrangement or understanding bid, but not all of those parties proceed with their bids until the suspension or finalisation of the request for bids process; or
(iv) 2 or more parties to the contract, arrangement or understanding bid and proceed with their bids, but at least 2 of them proceed with their bids on the basis that one of those bids is more likely to be successful than the others; or
(v) 2 or more parties to the contract, arrangement or understanding bid, but a material component of at least one of those bids is worked out in accordance with the contract, arrangement or understanding.
Note 1: For example, subparagraph (3)(a)(iii) will not apply in relation to a roster for the supply of after-hours medical services if the roster does not prevent, restrict or limit the supply of services.
Note 2: The purpose condition can be satisfied when a provision is considered with related provisions—see subsection (9).
Note 3: Party has an extended meaning—see section @44ZZRC.
Competition condition
(4) The competition condition is satisfied if at least 2 of the parties to the contract, arrangement or understanding:
(a) are or are likely to be; or
(b) but for any contract, arrangement or understanding, would be or would be likely to be;
in competition with each other in relation to:
(c) if paragraph (2)(c) or (3)(b) applies in relation to a supply, or likely supply, of goods or services—the supply of those goods or services; or
(d) if paragraph (2)(d) or (3)(b) applies in relation to an acquisition, or likely acquisition, of goods or services—the acquisition of those goods or services; or
(e) if paragraph (2)(e) or (f) applies in relation to a re-supply, or likely re-supply, of goods or services—the supply of those goods or services to that re-supplier; or
(f) if subparagraph (3)(a)(i) applies in relation to preventing, restricting or limiting the production, or likely production, of goods—the production of those goods; or
(g) if subparagraph (3)(a)(ii) applies in relation to preventing, restricting or limiting the capacity, or likely capacity, to supply services—the supply of those services; or
(h) if subparagraph (3)(a)(iii) applies in relation to preventing, restricting or limiting the supply, or likely supply, of goods or services—the supply of those goods or services; or
(i) if paragraph (3)(c) applies in relation to a supply of goods or services—the supply of those goods or services; or
(j) if paragraph (3)(c) applies in relation to an acquisition of goods or services—the acquisition of those goods or services.
Note: Party has an extended meaning—see section 44ZZRC.
Immaterial whether identities of persons can be ascertained
(5) It is immaterial whether the identities of the persons referred to in paragraph (2)(e) or (f) or subparagraph (3)(a)(iii), (b)(i) or (ii) can be ascertained.
Recommending prices etc.
(6) For the purposes of this Division, a provision of a contract, arrangement or understanding is not taken:
(a) to have the purpose mentioned in subsection (2); or
(b) to have, or be likely to have, the effect mentioned in subsection (2);
by reason only that it recommends, or provides for the recommending of, a price, discount, allowance, rebate or credit.
Immaterial whether particular circumstances or particular conditions
(7) It is immaterial whether:
(a) for the purposes of subsection (2), subparagraph (3)(a)(iii) and paragraphs (3)(b) and (c)—a supply or acquisition happens, or a likely supply or likely acquisition is to happen, in particular circumstances or on particular conditions; and
(b) for the purposes of subparagraph (3)(a)(i)—the production happens, or the likely production is to happen, in particular circumstances or on particular conditions; and
(c) for the purposes of subparagraph (3)(a)(ii)—the capacity exists, or the likely capacity is to exist, in particular circumstances or on particular conditions.
Considering related provisions—purpose/effect condition
(8) For the purposes of this Division, a provision of a contract, arrangement or understanding is taken to have the purpose, or to have or be likely to have the effect, mentioned in subsection (2) if the provision, when considered together with any or all of the following provisions:
(a) the other provisions of the contract, arrangement or understanding;
(b) the provisions of another contract, arrangement or understanding, if the parties to that other contract, arrangement or understanding consist of or include at least one of the parties to the first-mentioned contract, arrangement or understanding;
has that purpose, or has or is likely to have that effect.
Considering related provisions—purpose condition
(9) For the purposes of this Division, a provision of a contract, arrangement or understanding is taken to have the purpose mentioned in a paragraph of subsection (3) if the provision, when considered together with any or all of the following provisions:
(a) the other provisions of the contract, arrangement or understanding;
(b) the provisions of another contract, arrangement or understanding, if the parties to that other contract, arrangement or understanding consist of or include at least one of the parties to the first‑mentioned contract, arrangement or understanding;
has that purpose.
Purpose/effect of a provision
(10) For the purposes of this Division, a provision of a contract, arrangement or understanding is not to be taken not to have the purpose, or not to have or to be likely to have the effect, mentioned in subsection (2) by reason only of:
(a) the form of the provision; or
(b) the form of the contract, arrangement or understanding; or
(c) any description given to the provision, or to the contract, arrangement or understanding, by the parties.
Purpose of a provision
(11) For the purposes of this Division, a provision of a contract, arrangement or understanding is not to be taken not to have the purpose mentioned in a paragraph of subsection (3) by reason only of:
(a) the form of the provision; or
(b) the form of the contract, arrangement or understanding; or
(c) any description given to the provision, or to the contract, arrangement or understanding, by the parties.
Section 44ZZRF - Making a contract etc containing a cartel provision
Offence
(1) A corporation commits an offence if:
(a) the corporation makes a contract or arrangement, or arrives at an understanding; and
(b) the contract, arrangement or understanding contains a cartel provision.
Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.
(2) The fault element for paragraph (1)(b) is knowledge or belief.
Penalty
(3) An offence against subsection (1) is punishable on conviction by a fine not exceeding the greater of the following:
(a) $10,000,000;
(b) if the court can determine the total value of the benefits that:
(i) have been obtained by one or more persons; and
(ii) are reasonably attributable to the commission of the offence;
3 times that total value;
(c) if the court cannot determine the total value of those benefits—10% of the corporation’s annual turnover during the 12‑month period ending at the end of the month in which the corporation committed, or began committing, the offence.
Indictable offence
(4) An offence against subsection (1) is an indictable offence.
Section 44ZZRG Giving effect to a cartel provision
Offence
(1) A corporation commits an offence if:
(a) a contract, arrangement or understanding contains a cartel provision; and
(b) the corporation gives effect to the cartel provision.
Note: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.
(2) The fault element for paragraph (1)(a) is knowledge or belief.
Penalty
(3) An offence against subsection (1) is punishable on conviction by a fine not exceeding the greater of the following:
(a) $10,000,000;
(b) if the court can determine the total value of the benefits that:
(i) have been obtained by one or more persons; and
(ii) are reasonably attributable to the commission of the offence;
3 times that total value;
(c) if the court cannot determine the total value of those benefits—10% of the corporation’s annual turnover during the 12‑month period ending at the end of the month in which the corporation committed, or began committing, the offence.
Pre-commencement contracts etc.
(4) Paragraph (1)(a) applies to contracts or arrangements made, or understandings arrived at, before, at or after the commencement of this section.
Indictable offence
(5) An offence against subsection (1) is an indictable offence.
Joint ventures - prosecution
(1) Sections 44ZZRF and 44ZZRG do not apply in relation to a contract containing a cartel provision if:
(a) the cartel provision is for the purposes of a joint venture; and
(b) the joint venture is for the production and/or supply of goods or services; and
(c) in a case where subparagraph 4J(a)(i) applies to the joint venture—the joint venture is carried on jointly by the parties to the contract; and
(d) in a case where subparagraph 4J(a)(ii) applies to the joint venture—the joint venture is carried on by a body corporate formed by the parties to the contract for the purpose of enabling those parties to carry on the activity mentioned in paragraph (b) jointly by means of:
(i) their joint control; or
(ii) their ownership of shares in the capital;
of that body corporate.
(2) A person who wishes to rely on subsection (1) bears an evidential burden in relation to that matter.
...
Section 44ZZRP Joint ventures - civil penalty proceedings
(1) Sections 44ZZRJ and 44ZZRK do not apply in relation to a contract containing a cartel provision if:
(a) the cartel provision is for the purposes of a joint venture; and
(b) the joint venture is for the production and/or supply of goods or services; and
(c) in a case where subparagraph 4J(a)(i) applies to the joint venture—the joint venture is carried on jointly by the parties to the contract; and
(d) in a case where subparagraph 4J(a)(ii) applies to the joint venture—the joint venture is carried on by a body corporate formed by the parties to the contract for the purpose of enabling those parties to carry on the activity mentioned in paragraph (b) jointly by means of:
(i) their joint control; or
(ii) their ownership of shares in the capital;
of that body corporate.
(2) A person who wishes to rely on subsection (1) bears an evidential burden in relation to that matter.
Section 79(1)
[This pre-exisiting provision is amended to also apply to cartel offences and now provides that]
(e) in a case where:
(i) the provision is a cartel offence provision; and
(ii) the person is not a body corporate;
by a term of imprisonment not exceeding 10 years or a fine not exceeding 2,000 penalty units, or both; or