Criminal Cartels, markers and immunity

What is a criminal cartel?

A criminal cartel occurs when individuals and/or businesses enter into an agreement, with a purpose to:

  1. prevent competition between the member parties; and
  2. increase the profit made by the cartel members

Criminal cartels are usually engaging in conduct which causes price fixing, sharing markets, rigging bids and limiting supply.

Price fixing occurs when businesses set a price structure. For example, businesses will agree to sell a particular product or service at a set price which is generally higher than the usual price.

Sharing markets takes place when businesses agree to divide the market. This may involve dividing customers, suppliers and/or territories.

Rigging bids is when competitors agree which bidder will win and the price that the winner should pay. This agreement will usually occur before the auction begins.

Limiting supply involves businesses reducing the production or the availability of goods and services which results in an increase of the price for those goods and services.

 

What are the maximum penalties if you are convicted of a cartel offence?

If an individual is convicted of a cartel offence, the maximum penalty is:

  • 10 years imprisonment and/or a fine of up to $420,000 (per offence)
  • a pecuniary penalty of up to $500,000 (per civil contravention)

If a Corporation is found to have engaged in cartel related offences, the maximum penalty for each offence or contravention would be the greater of:

  • $10 million OR
  • 3 times the total value of the benefit derived OR
  • in circumstances where the benefit cannot be determined, 10% of the company’s annual turnover.

 

What is the ACCC Immunity and Cooperation Policy?

The ACCC has a policy which seeks to encourage individuals and corporations involved in criminal cartels to come forward and disclose cartel behaviour. Individuals/corporations can in certain circumstances disclose cartel behaviour to the ACCC in order to gain conditional or full immunity.

The ACCC considers whether civil immunity should be granted, and disclosures are referred to the Commonwealth Director of Public Prosecutions (CDPP) to determine applications for criminal immunity.

Some of the factors that affect whether immunity will be granted include:

  • the timing of the disclosure
  • whether conditions set by the ACCC have been met
  • whether full, frank and truthful disclosures have been made
  • whether an individual is considered the leader of a cartel
  • whether an individual has coerced others to join the cartel

 

What is a marker?

A marker preserves, for a limited period, a reporter’s status as the first party to apply for immunity in relation to a cartel.

Are you concerned about possible involvement in a cartel, or are you the subject of an ACCC or CDPP investigation? Contact us on (02) 9696 1361 or Carol Younes directly on 0404 056 777.