Deterrent Penalties for Corporate Colluders: Lifting the Bar

By Beaton-Wells, Caron; Clarke, Julie | University of Queensland Law Journal, June 2018 | Go to article overview

Deterrent Penalties for Corporate Colluders: Lifting the Bar


Beaton-Wells, Caron, Clarke, Julie, University of Queensland Law Journal


I INTRODUCTION

A critical review of corporate pecuniary penalties for cartel conduct in Australia is timely if not overdue. Debates about the role of individual sanctions notwithstanding, (1) financial penalties against corporations remain the predominant means of sanctioning cartel conduct in this country as elsewhere. (2) These sanctions are therefore the primary mechanism by which deterrence is sought to be achieved. Consistent with the international position, (3) deterrence has long been accepted as the primary, if not exclusive, rationale for cartel sanctions in Australia. (4)

Despite their importance as the principal means of deterrence, corporate penalties have always been substantially below the maximum stipulated by the Competition and Consumer Act 2010 (Cth) ('CCA') and there are scant signs of this changing in the future. (5) They also have failed to keep pace with the standard set in recent years internationally, in major jurisdictions such as the United States ('US') and European Union ('EU') particularly. (6)

Previous opportunities for a review of corporate penalties, both at the time of debating the design of the dual criminal-civil regime and in the context of the more recent Competition Policy Review, were not taken up. However, it is evident that the Australian Competition and Consumer Commission ('ACCC') is seeking to lift the bar in corporate penalty-setting, (7) and in 2017 the Australian government requested the Organisation for Economic Cooperation and Development ('OECD') to review its pecuniary penalties regime, including comparing it with practices of countries representative of OECD jurisdictions. Based on a fact-finding mission to consult with stakeholders in Australia and a comparative study with six other jurisdictions, (8) the OECD's report was released in March 2018.

In honour of the scholarship of Laura Guttuso and its significant contribution to the debate regarding another challenging issue in this field--the balance between public and private enforcement--this article is intended to contribute to the debate about the level of pecuniary penalties for corporations for cartel conduct in Australia. (9) The article critically examines the key findings and recommendations in the OECD's 2018 report. Adopting the sequence of analysis in the concluding Part of the report, the remainder of the article is structured as follows. Part II reviews the level of pecuniary penalties in Australia as compared to other jurisdictions. Part III examines legal constraints on pecuniary penalty-setting. In Part IV the methods for assessing pecuniary penalties are canvassed, contrasting the Australian approach with that taken in most other jurisdictions. Part V highlights issues with transparency and predictability in penalty-setting methods. Part VI is our conclusion.

II PENALTY LEVELS

The OECD's central finding regarding the level of pecuniary penalties for anticompetitive conduct in Australia is that it is low relative to other countries, 'particularly for large companies and for infringements that lasted for a number of years'. (10) Indeed the comparison was seen as so stark that the OECD described Australia as an 'outlier' in this respect. (11) This characterisation is difficult to refute. As the statistics set out below bear out, the contrast is particularly marked in the context of penalty levels over the last decade given the observed trend of increased fines across the world over this period. (12)

Between 2007-17, aggregate cartel fines imposed by the European Commission ('EC') for cartel conduct amounted to [euro]21 billion, which translates to almost AU$33 billion. (13) In the same period, total corporate fines of AU$297 million (or AU$328 million when adjusted for inflation) were imposed for cartels in Australia. There were 366 decisions taken by the EC, as compared to 95 decisions taken in Australia, during that period. (14) However, the average fine remains considerably higher in the EU, at AU$89 million compared with an average of AU$3 million per corporate respondent in Australia. …

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