Price Fixing is Getting Riskier
If you think the penalties in Australia for price fixing are bad, just be glad you are not a European truck manufacturer.
Earlier this month the European Commission imposed record cartel fines totalling almost €2.93 billion(approx $4.3 billion ) against 4 truck manufacturers. Of these, Daimler received the highest fine of €1.10 billion (approximately $1.5 billion).
The conduct started rather informally in a hotel in Brussels in 1997 and later involved more regular meetings of senior managers, often at trade fairs and events. It continued until 2011 when the European Commission conducted a series of raids. MAN received the “get out gaol free” card under the EC’s leniency policy, by blowing the whistle on the other participants.
The sting in the tail for all of the manufacturers (including the one who escaped being fined) is that they will almost certainly be the subject of very large damages actions brought by those affected by their cartel.
So what does this mean for you and your business?
Whilst Australia has had civil penalties for cartel conduct since 1974, just over 7 years ago a criminal regime was also introduced. For individuals, this can result in a sentence of up to 10 years in gaol as well as a fine. The ACCC has at long last taken its first criminal action against a participant in a cartel – and no doubt more will follow. This means gaol time for individuals involved in price fixing and other cartel behaviour, regardless of how senior or junior they are, is a real possibility.
Like the European Commission and many other jurisdictions, Australia has a leniency policy where the first to “dob in” other cartel participants can avoid any penalty or fine. That means you need to know quickly if your staff have done the wrong thing, so that you can get advice about making a leniency application before one of the other participants in the cartel does.
This European Commission decision is a great reminder of why Australian businesses need an effective competition and consumer law compliance program that includes:
- regular training of your sales staff on what they can do, as well as what they can’t
- a clearly articulated policy that makes clear the consequences to anyone engaging in illegal conduct and
- a mechanism by which staff can raise potential issues without fear of retribution.