Capturing the Criminality of Hard Core Cartels: The Australian Proposal

Article excerpt

[This article reviews the proposal to make serious cartel conduct a criminal offence in Australia. It analyses the extent to which the proposal captures the criminality of the conduct to which it will apply; in particular; its culpability, harmfulness and moral wrongfulness. Two key assumptions underpin this analysis. First, criminalisation makes the morality of serious cartel activity a relevant consideration in the design and application of the new law Secondly, recognition of the moral dimension will enhance the prospects of the criminal regime securing the support necessary for its effective enforcement It should also boost the regime's deterrence value by facilitating internalisation of relevant moral norms in the business community. The article concludes that there is still much work to be done in refining and even rethinking aspects of the new offence to ensure that it properly reflects the criminal nature of hard core cartels.]


I   Introduction
II  Background
III Culpability
IV  Harmfulness
V   Wrongfulness
VI  Conclusion
       A Culpability
       B Harmfulness
       C Wrongfulness


It is proposed in Australia to criminalise serious forms of business cartel activity, namely price-fixing, market-sharing, output restriction, and bid-rigging. (1) This proposal was announced by the former Treasurer in 2005 (2) and was supported by the then opposition Labor party, (3) recently elected to government. Shortly after the election, Labor officials indicated that criminalising legislation would be introduced within 12 months. (4) In so legislating, Australia will join a worldwide movement towards tougher regulation of cartels and, in particular, the imposition of criminal sanctions. (5) Collusive practices have been regulated by competition law in many countries for some time. Outside of North America, this regulation has largely been of an administrative and civil character. (6) In the last decade though, there has been a global burgeoning of the use of criminal law in dealing with business cartels. (7) The US has led the criminalisation movement where, since the late 1990s. competition authorities have made it their top priority to prosecute and imprison participants in international cartels affecting the US economy. (8) The movement has also had the support of international organisations, such as the Organisation for Economic Co-Operation and Development ('OECD') which has taken a strong anti-cartel stance, exhorting members to ensure that their competition laws effectively deter so-called 'hard core' cartel activity. (9)

An important aspect of the debate surrounding cartel criminalisation concerns the justification of criminal penalties on moral grounds. More specifically, there is the question as to how, at the level of legislative prescription, the offence of cartel conduct may be designed so as to capture explicitly or implicitly the moral reprehensibility generally associated with criminal behaviour. As has been observed in relation to the European experience, the real challenge for jurisdictions new to cartel criminalisation is to establish a concept of 'antitrust delinquency', similar to that which exists in the US. (10) Recognising this challenge, it has been noted in the Australian context by the Trade Practices Act Review Committee ('Dawson Committee') that there is substantial difficulty in 'defining the requisite degree of criminality to justify the imposition of criminal sanctions'. (11)

This difficulty is aggravated by the potential for resistance in Australian competition law circles to the idea that morality may become a relevant consideration in an area of regulation dominated by law and economics. (12) Such resistance has been displayed even in the US, where cartels have attracted criminal sanctions for over a century. (13) Generally speaking, in the US, antitrust enforcers, policy-makers and scholars have circumvented the morality of antitrust crimes. …