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AustraliaWorking Party on Criminal Cartel Penalties 2004

Working Party Report on Criminal Penalties for Cartel Behaviour

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(4MB PDF file from Brent Fisse Lawyers)

External linkDownload Originally released (heavily redacted Report)
(3.2MB file from Brent Fisse Lawyers)

About this Review

Executive summary from report:

On 3 October 2003, the Treasurer announced a working party would consider whether an appropriate criminal offence for cartel conduct could be introduced into Australian law. The Government had accepted, in principle, the recommendation of the Review of the competition provisions of the Trade Practices Act 1974 (the Dawson Review) that criminal penalties for serious cartel conduct be introduced. However, this was subject to a working party finding practical solutions to the problems that would arise in introducing criminal sanctions, as identified by the Dawson Review.

Principally, the problems identified in the Dawson Review centered on appropriately defining a criminal offence and implementing a leniency or immunity policy. However the working party had to resolve other related issues such as the implications of introducing criminal sanctions for the conduct of cartel investigations and the nature of appropriate penalties.

See also External linkpress release announcing the working party

Working party membership and operation

The Report noted that "The working party comprised officials from the Department of the Treasury, the Attorney-General's Department, the Australian Competition and Consumer Commission (ACCC) and the Commonwealth Director of Public Prosecutions (DPP)". No further identification was provided. The terms of reference further stated that the working party was to be chaired by a Treasury official and Treasury would provide secretariat support.


The most striking differences between the Working Party Report (not released until after the cartel criminal legislation came into operation in mid-2010) is its recommendation for 'secrecy' as an element of the cartel offence and the proposed exclusion of notified agreements. Neither formed part of the original government bill or the final act. Dishonesty was first proposed as the distinguishing element for the cartel offence and later removed after heavy criticism. No exemption for notified conduct exists, save for that which is both notified and authorised by the ACCC. The final act introducing criminal penalties is available here.


Working party terms of reference

See also External linkpress release announcing the working party. Reproduced at pages 66-67 of the Report.

Having regard to Recommendation 10.1 of the Review of the Competition Provisions of the Trade Practices Act 1974 [see Dawson Report] and the Commonwealth Government Response, the working party is to consider and report on whether an appropriately defined criminal offence or offences can be introduced into Commonwealth law proscribing some or all of the activities that comprise cartel behaviour. More specifically, the working party's consideration of this matter is to include a consideration of:

  • the activities that comprise cartel behaviour and the provision of a workable definition of such behaviour, having regard to the definitions used in other jurisdictions and by the OECD;
  • feasible options for criminalising cartel behaviour, including recommendations as to the elements of any offence;
  • whether, and to what extent, any proposed offence might overlap with existing civil prohibitions and whether any measures (legislative or otherwise) are required to manage this overlap;
  • the appropriate maximum penalties for any proposed offence; any appropriate defence against, or exemptions from, a proposed offence;
  • the development of a clear and certain leniency policy, having regard to the operation of leniency policies in other jurisdictions; and
  • how investigative, prosecutorial and other relevant legal processes might be used or might need to be modified to ensure the effectiveness of any proposed offence.

In undertaking this task, the working party is to examine relevant factors including, but not limited to, the following:

  • the role of criminal penalties as an effective deterrent to cartel behaviour;
  • the economic effects of cartels and penalising cartel behaviour;
  • the impact of any proposed penalties on business;
  • the detection of cartel behaviour;
  • similar offences in other jurisdictions and the implications for Australia of other jurisdictions' experiences;
  • the transparency and accountability of investigative and prosecutorial agencies;
  • the compatibility of any proposal with existing Australian approaches to law enforcement; and
  • issues raised in the Review of the Competition Provisions of the Trade Practices Act 1974.



"The working party recommends:

2.1.1 The concept of secrecy be used to distinguish criminal cartel conduct from the conduct caught by civil contraventions in the Trade Practices Act 1974.

2.1.2 Establishing secrecy requires proof of:

- the physical element (that the agreement was not generally known to customers); and

- the fault element (that the defendant was reckless as to whether the agreement was generally known to customers).

2.1.3 The cartel offence capture price fixing, output restrictions, bid rigging and market sharing. In addition to the requirement for secrecy, the physical elements of the cartel offence (all of which must be satisfied) should comprise that:

- an agreement is made between two or more parties;

- the parties who made the agreement are competitors in the supply or acquisition of goods or services in a particular market; and

- the agreement is to fix prices, constrain supply, divide or allocate markets or rig bids.

2.1.4 The criminal cartel offence apply to individuals and corporations by incorporating it in the Competition Code, that is, Part IV (Restrictive Trade Practices) and Schedule 1 of the Trade Practices Act 1974.

2.1.5 The offence apply to all those who engage in criminal cartel conduct, regardless of size.

2.1.6 It would be a defence to notify the ACCC of the arrangement in writing before making or implementing the arrangement, or to have known that the ACCC had been so notified.

2.1.7 The following not be covered by the criminal cartel offence:

- existing general exemptions under the Trade Practices Act 1974;

- activities exempted from the per se price fixing provision (section 45A of the Trade Practices Act 1974), taking into consideration amendments to these flowing from Dawson recommendations 8.1 and 8.2; and

- other arrangements permitted under the civil regime."


Release of report pursuant to FOI Act

It is unlikely that this report would ever have become public but for the persistent efforts of External linkBrent Fisse Lawyers in obtaining their release.

Initial requests

Following requests in March, in April 2007 Treasury advised it would not release the full Working Party Report (it released only three pages relating to the terms of reference which had already been made public in October 2003). A request for internal review followed in May 2007 and further parts were released relating to 'purely factual material'. The reviewing officer stated that:

'... ultimately the matters deliberated in this report were provided to Cabinet. It is the nature of the work of working parties whose participants are drawn from multiple agencies that it will be subject to review, constructive criticism and revision. The effect of this is that the working party report may not reflect the government’s final position. This disjuncture may in my view discourage working parties from generating ideas and options that may not ultimately be approved if the participants believe, through the release of this document, that their deliberations will be publicly accessible. Finally, the reasons for the Government’s decision to criminalise serious cartel conduct are clearly enunciated in the Treasurer’s press release dated 2 February 2005. Disclosure of the report would not add to the public’s understanding of the Government’s decision in a significant enough manner to justify the potential to breach cabinet confidentiality and to inhibit cooperative policy-making processes. Partial release of sections of the report Section 36(5) of the FOI Act states that the exemption does not apply to a document by reason only of purely factual material contained in the document.'

In June 2007 Fisse applied to the AAT for review of the Treasury decision not to release the report - this application was unsuccessful. In rejecting the application the AAT did not (despite having power to do so) review the working party report, instead relying on evidence of a witness from the Department of the Prime Minister and Cabinet.

A subsequent appeal to the Federal Court was also unsuccessful. See External linkFisse v Secretary, Department of the Treasury [2008] FCAFC 188 (11 December 2008). At para 10 of his reasons for judgment, Stone J referred to the Administrative Appeals Tribunal's acknowledgment that:

It was common ground here that three factors tended to favour disclosure of the report. They were that there is a general right of access to government information recognised by ss 3 and 11 of the Act, and upholding that right is in the public interest (subject to the statutory exceptions). Secondly, disclosure of government information helps individuals to participate meaningfully in the democratic process through discussions on matters of public policy and law. Thirdly, there is a public interest in promoting transparent and accountable decision-making in government. It was also agreed that proposals to criminalise serious cartel conduct, and the ability of interested parties to participate in free and open discussion of it, are matters of public interest.

Despite this, the 'importance of Cabinet confidentiality outweighed all of these factors'. Disclosure here, the Tribunal found, would 'breach the convention of Cabinet confidentiality, which is pivotal to the proper functioning of the executive and the parliament of the Commonwealth'. Section 34 of the FOI Act exempted documents submitted to Cabinet (where brought into existence for that purpose) regardless of their content.

Justices Stone and Buchanan also dismissed Fisse's appeal.

2010 FOI request

A further application for the Working Party Report was made to Treasury on 1 Nov 2010; this was made pursuant to an amended FOI Act (see External linkFreedom of Information Amendment (Reform) Act 2010) and resulted in the release of the document on 2 December 2010. Brent Fisse describes the Report as follows on his External linknews page:

The Report is remarkable in several respects. It includes a recommendation that notification of a contract, arrangement or understanding to the ACCC be a defence in criminal proceedings for cartel conduct and another that secrecy be an element of the cartel offence proposed. Those recommendations are highly problematic and were not accepted by the Government. Instead, the Government of the time switched to making dishonesty an element of the offence. The Treasurer Costello's Press Release of 2 February 2005 announcing that the Government would introduce criminal penalties for serious cartel behaviour with a dishonesty-based cartel offence seems calculated to conceal the fact that the Government departed significantly from the solutions proposed by the Working Party. No phoenix could ever emerge from these ashes but forensic pathologists may find traces of DNA scattered throughout the Working Party Report ...

Difference between redacted version and full version

An earlier FOI request produced a very heavily redacted version of the Report (download from External linkBrent Fisse Lawyers). Some of the redactions are truly remarkable. For example:

  • The table of contents (completely innocuous) is almost entirely redacted, other than 'Executive Summary', Part 1 - outlining the issues and Appendix B (terms of reference already public)
  • On page 1 the heading, 'The Working Party's Task' is redacted; this is itself is extraordinary, all the more so because this heading is not redacted from the table of contents!
  • The statement 'However the working party had to resolve other related issues such as the implications of introducing criminal sanctions for the conduct of cartel investigations and the nature of appropriate penalties.'
  • The heading 'Managing Parallel Civil and Criminal Provisions' and the first sentence that follows: 'A subsequent issue to be resolved was what procedures and arrangements would need to be in place to investigate and prosecute a criminal cartel offence' [page 5]. This is despite the fact that the two paragraphs that follow are not redacted which highlight these 'issues to be resolved' (discussion of how it was proposed to resolve those issues were, of course, also redacted)
  • The headings 'Resolving the Issues', 'Defining the Cartel Offence' and 'Task of the working party' (p 15) were all redacted, although three of the four paragraphs describing the task of the working party remain in tact (the final paragraph, which reads: "The working party therefore was required to consider whether a satisfactory definition of serious cartel behaviour that should be subject to criminal sanction can be developed" was, for some reason, redacted).
  • The heading 'Defining serious cartel conduct' on page 16 remains along with some preliminary comments and discussion of 'dishonesty' also remains in tact. This is virtually the only 'analysis' that does remain in tact. All references to the alternative test considered (and ultimately favoured by the Working Group) - secrecy - are removed. Given the Government subsequently proposed a 'dishonesty' test, this would seem to paint a highly misleading picture of the Working Group's deliberations.
  • On page 31, the partial sentence 'These examples my be at the higher end of the international scale' is omitted, as is the sentence 'The difficulty competition authorities have in detecting and deterring collusive arrangements is evidenced by the tendency for cartels to persist for years, if not decades.'

Most significantly, all references to 'secrecy' are redacted. There are many other examples. There is no public or national interest involved in redacting this material, which highlights significant flaws in FOI laws and, at least in my view, a serious abuse of the protection afforded by the Act for Cabinet documents - it makes a mockery of the whole process.