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Immunity Policy: Revolution or Religion?
An Australian Case-Study
Professor Caron Beaton-Wells*
Paper for the Antitrust Enforcement Symposium 2013**
Pembroke College, University of Oxford
22-23 June 2013
Immunity (leniency) policies are widely regarded as having revolutionised anti-cartel law enforcement. However, the generally unquestioning and universalist approach taken to such policies by competition authorities has as much the hallmarks of religion as it does revolution. Drawing on experience with the Australian Competition and Consumer Commission’s Immunity Policy for Cartel Conduct as a case study, this paper suggests that there is value in a more searching approach to immunity policy. It explores the insights available from a critical analysis of the role, operation and effectiveness of an immunity policy in the context of a specific jurisdiction. The analysis examines the extent to which the policy does and should adhere to the strict orthodoxy associated with immunity policy design and administration; the extent to which it is effective in facilitating detection, prosecution and deterrence of cartel conduct and the challenges involved in effectiveness-testing; the policy’s interaction with other aspects of the overall system for enforcement and compliance and the degree to which the policy is consistent with the competition authority’s constitutional values.
I Introduction
Deterring, detecting and prosecuting cartel conduct is a high priority for competition authorities worldwide. Cartel conduct involves various forms of arrangement between competitors that eliminate or subvert the normal processes of competition and thereby have at least the potential to increase prices, reduce consumer choice and stifle innovation. Such arrangements are widely seen as the most harmful category of anti-competitive conduct. Serious or so-called ‘hard core’[1] cartels usually involve secrecy and deception by participants with the deliberate aim of avoiding discovery. They are therefore difficult to detect and as documentary evidence is rarely available, difficult to prosecute even when detected. Such activity is also often highly lucrative and therefore problematic to deter, even in the face of the toughest sanctions.
The challenges associated with anti-cartel law enforcement have prompted the widespread adoption by competition authorities of a distinctive tool – the immunity (or leniency, as it is alternatively called) policy.[2] Providing the first eligible cartel member with full immunity from penalties, this is a tool employed only in respect of cartel conduct and not in relation to any other type of anti-competitive conduct. It is difficult to identify equivalent policies in the enforcement toolboxes of agencies enforcing the law against other forms of illegal or criminal conduct.
Based on the game theoretic model known as the ‘prisoner’s dilemma’[3], the use of an immunity policy in anti-cartel law enforcement is justified on the basis that it is the most effective and least costly mechanism for detecting and prosecuting activity that is generally systematic, deliberate and covert.[4] It is also seen as contributing to the deterrence of cartel conduct.[5] These benefits are regarded by competition authorities as outweighing any adverse effects in terms of lower penalties overall as well as any adverse political or moral implications.[6]
More than 50 jurisdictions have some form of immunity policy in their anti-cartel enforcement program.[7] Enforcers are zealous in their support for and advocacy of such policies,[8] and are at times defensive in the face of criticisms or perceived threats to their operation.[9] With some justification, the adoption of immunity policies has been described as a ‘revolution’,[10] a conceivably apt description in what is referred to by enforcers as ‘the war against cartels’.[11]
Based largely on the experience of the United States (US) Department of Justice (DOJ), there is a high degree of general consistency in the design and administration of immunity policies around the world. Since the introduction of its revised policy in 1993,[12] the DOJ has argued that there are certain prerequisites for ‘an effective leniency program’.[13] Described as ‘cornerstones’ and ‘indispensable components’, these prerequisites have been articulated as follows:
‘First, the jurisdiction’s antitrust laws must provide the threat of severe sanctions for those who participate in hardcore cartel activity and fail to self-report. Second, organizations must perceive a high risk of detection by antitrust authorities if they do not self-report. Third, there must be transparency and predictability to the greatest extent possible throughout a jurisdiction’s cartel enforcement program, so that companies can predict with a high degree of certainty how they will be treated if they seek leniency and what the consequences will be if they do not. These three major cornerstones – severe sanctions, heightened fear of detection, and transparency in enforcement policies – are the indispensable components of every effective leniency program.’[14]
The US DOJ orthodoxy concerning the conditions or prerequisites for an effective immunity has widespread support. It is reflected in the discussions and guidance on the topic by international organisations that represent a significant number of competition authorities – the OECD, ICN and ECN, for example.[15]
It is not uncommon for agencies to review the design and operation of their immunity policy every few years. While the impetuses for and scope of such reviews may be variable, it appears that they are generally operational or technical in nature. They tend to focus, for example, on the scope or interpretation of conditions for eligibility or on the practical aspects of the process for making applications or decisions in relation to applications, often with a view to assessing the degree to which the effectiveness prerequisites, as articulated above, are being met.[16] Rarely do such reviews involve standing back and critically and objectively examining the effectiveness of the policy as measured against its objectives of facilitating detection, prosecution and deterrence.
Similarly, such reviews tend to be inward-looking, focussed on the immunity policy in a fairly discrete and isolated way, neglecting the opportunity to consider: (1) the extent to which the policy has implications for or effects on other aspects of the overall enforcement system (such as advocacy and outreach activities, private actions and compliance programs); and (2) the extent to which the policy is reconciliable with the agency’s general approach to governance and ‘constitutional’ values (such as transparency, consistency, proportionality and fairness).
The narrow and generally uncritical approach taken to the review of immunity policies by enforcement agencies suggests that they might be described as much as a religion as a revolution in anti-cartel law enforcement.
II Background to and scope of this paper
There is a large body of
economic research of both a theoretical and empirical nature that has sought to
establish the ‘optimal’
design of immunity policies and test for
their ‘success’ in cartel detection, prosecution and deterrence.
While valuable
on its own terms, this research has limitations relating to data
availability and methodology.[17] It
has also produced mixed results.[18]
More generally, the economic literature does not reveal how an immunity policy
is actually perceived by the business sector generally
and immunity applicants
or prospective applicants specifically and by their
advisers,[19] and limited also in
the extent to which it reveals the way in which the policy is implemented by
enforcement agencies in practice.
The economic research has also not explored
the role and impact of immunity policies in a broader policy setting, in which
other
interconnected aspects of enforcement are at work and to which general
considerations of agency governance are relevant.
While qualitative approaches, involving case studies and interviews, have the potential to supplement and overcome some of the limitations of the economic research in this area, relatively little qualitative research appears to have been undertaken. As far as the author is aware, there have been only two case studies published about the impact of an immunity policy, both of which related to cartels investigated by European authorities.[20] There have also only been two publicly reported attempts at eliciting information about immunity policy effectiveness through interviews with practitioners, one by Associate Professor Daniel Sokol in the US[21] and another by a consultancy firm commissioned by the Office of Fair Trading (the United Kingdom competition authority).[22] The US study raised questions about the effectiveness of the US immunity policy in practice and suggested it was having hitherto unreported adverse effects, including the use of the policy strategically by businesses to damage their rivals.[23] There have also been a number of published commentaries by practitioners and others in recent years questioning the value of immunity policies and cautioning against putting ‘all the eggs in the immunity basket’[24] as well as drawing attention to the potentially deleterious effects of such policies on private enforcement,[25] on criminal trials,[26] and on engendering a culture of compliance amongst the business community.[27]
This paper reports on a research project being conducted by the author in relation to immunity policies (the Immunity Project), the aims of which are:
The early focus in the research is on the experience in Australia with the immunity policy of the Australian Competition and Consumer Commission (ACCC). The Australian experience is used as an initial case study to assist in refining the research aims and formulating specific research questions. Thereafter, the experience in other selected jurisdictions will be examined and compared. The research method for the case study has involved a series of interviews with representatives of the ACCC and the Commonwealth Director of Public Prosecutions (CDPP) and with legal practitioners, specifically those who have the most experience in advising immunity applicants and making immunity applications (the pool of such practitioners is small in Australia). Interviews have been conducted with 20 interviewees, listed in the Appendix. The case study draws also on the author’s recent research concerning the introduction of criminal sanctions for cartel conduct in Australia[28] and on her contribution to an emerging debate concerning private enforcement of competition law in this country and its interaction with public enforcement.[29]
The ACCC has had a form of immunity policy for cartel conduct since 2003,[30] known since 2005 as the ACCC Immunity Policy for Cartel Conduct (AIPCC),[31] elaborated upon in ACCC Immunity Policy Interpretation Guidelines (Interpretation Guidelines).[32] This policy emulates the general model of such policies employed by competition authorities around the world and immunises the party that is first to report a cartel and meets other specified conditions from any legal proceeding or penalty in connection with the conduct that is the subject of immunity.
The ACCC has stated for some time that it has received ‘1-2 approaches per month’[33] under the AIPCC since 2005.[34] In a recent public statement on the matter, the current Chairman stated that the AIPCC ‘continues to be the lead source of information for cartel investigations and proceedings’.[35] Apart from these statements, little else has been reported publicly about the use, effectiveness and role of the policy, including its contribution to or detraction from other aspects of the system for enforcement and compliance generally. The AIPCC was reviewed in connection with the introduction of a dual civil/criminal regime for cartel conduct in 2009.[36] At the same time the CDPP’s Prosecution Policy (CDPP Prosecution Policy) was amended and an annexure added to explain how immunity from cartel offences would be handled by the CDPP (Annexure B).[37] The focus of that review was primarily on how applications for immunity from civil and criminal proceedings would be managed and the respective roles of and relationship between the ACCC and CDPP in that process. There has not been a more wide ranging examination of the AIPCC since the review undertaken of what was then known as the leniency policy in 2004, 13 years ago (the 2004 Review).[38] However, on 4 May 2013, it was announced that the ACCC is currently undertaking a review of the AIPCC (ACCC review).[39]
Consistently with the approach taken generally to such reviews, the ACCC review is entirely operational in nature, described in the announcement as having the aims of: ‘better understanding the operation of the policy’ - ‘what aspects are working well’, and ‘what aspects could be improved’.[40] Examples given of the types of matters being reviewed include the scope of the eligibility condition relating to coercion or clear leadership and the process involved in handling dual civil / criminal applications. It is evident that the review does not encompass a more general interrogation of the extent to which the policy has been effective in fulfilling its objectives or a holistic consideration of the role of the policy in the system for enforcement of Australia’s anti-cartel laws.
This paper reports on preliminary findings of the Australian case-study. It is structured from this point as follows:
Part III Prerequisites for the AIPCC’s effectiveness
Part IV Testing the AIPCC’s effectiveness
Part V The AIPCC as an element of an overall enforcement and compliance system
Part VI The AIPCC and ACCC governance
Part VII concludes with reflections on the significance of the case-study as an insight into the religion of immunity policy.
III Prerequisites for the AIPCC’s effectiveness
A Severe sanctions
The first prerequisite to an effective immunity policy is said to be severe sanctions and, more specifically, sanctions that are so severe that the potential penalties associated with cartel conduct outweigh the potential rewards.[41] This has obvious implications for the way in which monetary penalties are calculated. However, given the limitations on imposing what would be seen as ‘optimal’ fines from this perspective,[42] there is also a view (most fervently propounded by the US DOJ) that an immunity policy will be most effective where there are criminal sanctions – and more particularly jail time for individuals – that apply.[43]
In Australia, between 1993 and 2007, the maximum pecuniary (civil) penalty applicable to cartel conduct for corporations was AUD10 million and AUD500,000 for individuals. From 2007, the corporate maximum was changed to the greater of AUD10 million, three times the gain derived from the contravention or, where the gain is unascertainable, 10% of annual corporate group turnover over a 12 month period.[44] There was no change to the maximum for individuals. The change to the maximum for corporate penalties was prompted by a recommendation by an independent review committee on the basis of general acceptance ‘that an effective sanction for cartel activity should take into account the expected gains from the cartel.’[45]
On average, corporate and individual fines for cartel conduct have fallen far below the pre-2007 statutory maxima and considerably below the level of fines in major antitrust jurisdictions, the US and European Union (EU). Between 2000 and 2012, the average corporate fine was AUD1,2 million and the average individual fine, AUD32,000. It is too early to assess the impact of the 2007 amendment as there has yet to be a cartel case in which the new maximum has applied. In part the low level of fines in Australia has been a product of an opaque unstructured approach to penalty assessment and in part it has been a product of the fact that, in a significant proportion of cartel cases, fines are negotiated between the respondents and the ACCC pursuant to its general Cooperation Policy for Enforcement Matters 2002 (CPEM) and then presented to the court for approval based on an agreed statement of facts.[46] In almost all cases, judicial approval has been given for the negotiated ‘settlement’. The process of negotiation relating to jointly recommended penalties often involves significant compromises on the part of the ACCC as to the quantum of penalty, amongst other things.[47]
There was no suggestion at the time of the 2007 penalty maximum amendment that it was a change necessary to increase the effectiveness of the AIPCC. Indeed, the Committee that recommended the change expressed substantial concerns that the introduction of a criminal regime would undermine the effectiveness of the policy owing to the risk that the CDPP would not be prepared to adopt a consistent policy.[48] The change also did not appear to have any impact on the number of immunity applications – it having been consistently reported that the policy has attracted ‘1-2 approaches’ per month since 2005.[49] Aside from these intermittent and largely uninformative reports, the ACCC has not had a practice of publishing figures about the use of or outcomes under the AIPCC.[50]
Moreover, having regard to its practice in negotiating agreed penalties that do not reflect legislative expectations (as indicated by the statutory maxima) and fall far below international standards, the ACCC does not appear to have regarded the level of such penalties as undermining the effectiveness of the AIPCC. To some extent this may be attributable to the fact that, between 2002 and 2009, the ACCC waged a concerted public campaign in support of the introduction of criminal sanctions for cartel conduct, including jail time for individuals.[51] The campaign resulted in the introduction of cartel offences and criminal sanctions,[52] including a maximum 10 year jail sentence for individual offenders in 2009.[53]
One of the key claims made by the ACCC in support of the criminal reform was that it would bolster the AIPCC.[54] The simple logic offered was that, by adding clout to the ‘stick’, the ‘carrot’ of immunity from prosecution will be more irresistible. The decision as to whether or not to apply for immunity would no longer be a business decision (weighing the avoidance of pecuniary penalties against exposure to civil damages). It would be a decision about whether or not to risk imprisonment — a decision to which it is much more difficult to attach a ‘price tag’. Several of the practitioners interviewed for the Immunity Project supported this view. Typical of the views expressed in this regard was the observation of one practitioner: ‘it’s also been pretty clear that until the law changed, they [referring to international clients implicated in cartel activity affecting Australia] saw Australia as only a fining jurisdiction and therefore it wasn't top of mind concern compared to say concerns in other jurisdictions.’ However, these views are by their nature anecdotal, if not impressionistic, and appear to say more about the effectiveness of the rhetoric than the reality.
Figures provided to the author for the purposes of the Immunity Project and subsequently published by the ACCC for the first time since the policy was introduced (the ACCC figures) cast doubt on the claim that individual criminal liability and sanctions will enhance the effectiveness of the AIPCC. The ACCC figures do not demonstrate an increase in markers or proffers (the oral application made for conditional immunity) since 2009. In the four year period between 2005 and 2009, 47 markers were received (56% of the total markers received between 2005 and 2013), whereas in just under four years since 2009, 36 have been received (43% of the total markers). 28 proffers were made between 2005 and 2009 (57% of the total proffers), and 21 since 2009 (42% of the total proffers). Thus, in fact, markers and proffers have been fewer in number since criminal sanctions were introduced. It is also not clear how many of the post-2009 markers or proffers related to conduct potentially subject to the offences introduced in 2009; however, it appears to be a low proportion. The CDPP representative interviewed for the Project indicated that the CDPP had received only nine referrals of applications for criminal immunity from the ACCC to date. Another possible interpretation of these low numbers is that the introduction of criminal sanctions has deterred cartels from forming and thus there are relatively fewer cartels to report than prior to 2009. Such an interpretation is arguably premature and, in any event, is highly problematic in the assumptions it makes about the way in which deterrence works.[55]
While it may be said that it is still too early to assess the impact of criminalisation on the detection effectiveness of the AIPCC, the initial signs (based on four years of data) appear to contradict the argument that the more severe the sanctions applicable to cartel conduct, the more effective an immunity policy will be. At least, that argument does not appear to have been borne out in Australia to date. If anything, the signs are that the criminal regime has had the opposite effect. Furthermore, the process by which dual civil/criminal applications for immunity is being handled by the ACCC and the CDPP is clearly not working as smoothly as was intended. While it was acknowledged that the independence of the two agencies had to be respected and, in particular, the exclusivity of the CDPP’s power to make decisions with respect to criminal prosecution preserved, the process for handling dual applications was fashioned with the intention, perhaps hope, that decisions would be made in a coordinated, certain and timely fashion and communicated simultaneously to applicants.[56] The Immunity Project interviews have revealed that, contrary to that intention, there have been, at times, considerable delays in decision-making and uncertainty surrounding the attitude and approach of the CDPP to immunity matters.[57] While this is clearly hampering the ACCC in progressing its investigations, it is not clear yet whether ultimately it is likely to undermine the efficacy of the AIPCC.
B Fear of detection
The second prerequisite to an effective immunity policy is said to be the creation of a genuine fear by cartelists and potential cartelists that their activity will be detected.[58] Such a fear is seen as essential not only to inducing immunity applications, but also to deterring cartel conduct. Instilling the requisite fear is said to be predicated on the enforcement agency having access to significant law enforcement powers and a track record of detecting cartels. No doubt the agency’s reputation as a well-resourced and committed enforcer would also be material. The risk of detection is said create distrust and panic amongst cartel members, a dynamic that ‘literally creates a race to be the first to the enforcer’s door.’[59] That dynamic is seen as further enhanced by the opportunity for individuals to make immunity applications in their own right, generating a ‘race between the company and it employee.’[60]
In Australia, University of Melbourne research in 2010 revealed that business people in this country regard it as fairly unlikely that cartel conduct will be detected and moreover, that if detected, enforcement action will ensue.[61] This is despite the ACCC having extensive investigatory powers available to it[62] and a general reputation as an aggressive, if not zealous, enforcement agency.[63] However, while the research results have implications for deterrence and compliance, they do not appear necessarily to have implications for the efficacy of the AIPCC.
The practitioner interviewees for the Immunity Project were asked about the factors that prompt clients to seek advice relating to the making of an immunity application. None identified consideration of the likelihood of detection, either through the ACCC’s use of its investigatory powers or through the immunity application of an individual employee, as a highly material factor in practice. As one practitioner observed: ‘I have never come across a situation where someone’s come to me, sought advice, it looks like a problem and they’ve said, “oh but we’ll never be caught”’.
In the factors that were identified as relevant to the decision to apply for immunity, two common themes strongly emerged.
First, consistent with the rejection of detection risk as a consideration, practitioners indicated that for large corporate clients, the mere discovery of cartel conduct within their business was sufficient to prompt the making of an immunity application. In part, this was because of an ‘in principle’ view that if the company has been involved in illegal, let alone criminal, conduct, then it was something that should be reported to the authorities. Senior executives in large companies were described by a practitioner interviewee as, in his experience, ‘completely horrified’ to find their company has been involved in cartel activity. Aligned with this strong emotive response, reporting was seen as ‘an ethical position’ to take, as ‘the right thing to do’ as a ‘good corporate citizen’. As another practitioner put it, for the large corporate clients with which he has dealt, once cartel conduct was discovered in their ranks, ‘it just never entered their mind that they wouldn’t cooperate or wouldn’t seek leniency or immunity. ... That was their corporate culture and that was what they were going to do.’
In part, reporting upon discovery without close, if any, regard to the risk of detection was considered a pragmatic response. Reporting was seen as the first step in taking prompt practical measures to end the conduct, deal with the problem and start the process of moving on from it. One example given of this was where there is an acquisition of a company and during the due diligence process, cartel activity was discovered. Reporting such conduct, as the practitioner described, was seen in those circumstances ‘as part of cleaning up their own stables ... effectively a view was taken that they needed to deal with this risk before the transaction took place. The way to deal with it was to go and see the US DOJ and EC.’
Secondly, practitioners explained that it was increasingly common for immunity applications to be made in Australia as a consequence of an approach by a foreign practitioner on behalf of a multinational client in connection with discovery of cartel activity in one or more overseas countries. Where the client has operations in Australia, the Australian application is made pursuant to a multi-jurisdictional process of applications. This is consistent with the reflection by the ACCC interviewees that approximately half of the Commission’s investigations in recent years have concerned international cartels. However, what is significant for present purposes is that, in these circumstances, the application is sought from overseas and generally made under the AIPCC regardless of any risk of detection in Australia – indeed, without detailed inquiry, if any at all, into whether or not the relevant activity is likely to be actionable or be the subject of enforcement proceedings in this jurisdiction.
Practitioner interviewees gave examples of international matters in which they had been involved in which applications had been made for immunity, and conditional civil immunity granted, for conduct that would not have been or was most unlikely to be the subject of proceedings in Australia for one reason or another. This may be because of jurisdictional issues (while the Australian cartel prohibitions apply to extraterritorial conduct, jurisdiction only applies to companies incorporated in or carrying on business in Australia and to individuals who are citizens of or ordinarily resident in Australia),[64] because of expiry or imminent expiry of the limitations period (a period of 6 years from the time of the contravention),[65] or because of the scope of Australian law on some elements of liability (the nature of an ‘understanding’ for the purposes of the cartel prohibitions and offences in this jurisdiction, for example, is a much narrower concept than that of a ‘concerted practice’ under European competition rules).[66] Practitioners explained that immunity applications for potentially unactionable conduct are made virtually automatically and despite the fact that, if successful, the applicant will be subject to the onerous burden of disclosure and cooperation with the ACCC, may have reputational effects and may expose it to private actions.[67] With a degree of cynicism, one practitioner described this process involving foreign law firms and their local agents or partners as ‘an industry, a farce’.
C Transparency, certainty and predictability
The third prerequisite to an effective immunity policy is said to be ‘transparency to the greatest degree possible throughout the enforcement program’ and the ability of a company to ‘predict with a high degree of certainty how it will be treated if it reports the conduct and what the consequences will be if it does not.’[68] Such transparency and the certainty and predictability it provides is said to be essential in the written policy as well as in abdication to the extent possible of discretion in the way in which the policy will be applied. In particular, it is emphasised that ‘uncertainty in the qualification process (a reference to the conditions that determine eligibility for immunity) will kill an amnesty program.’[69]
The ACCC has sought to achieve the prescribed standards of transparency, certainty and predictability in its written policy and detailed written guidelines that set out how the policy is interpreted. There remains, nevertheless, uncertainty in several respects. As referred to above, there is uncertainty amongst practitioners as to how decisions involving the CDPP in relation to criminal immunity are made. None of the practitioners suggested, however, that this is proving or is likely to prove a disincentive to applications. There is also uncertainty as to the likely consequences if an application is not made. In part this is because in those instances in which the conduct is likely to involve a civil contravention, the parties involved will be able to cooperate under the CPEM and, as explained above, be able to negotiate with the ACCC a jointly recommended penalty with a potentially significant discount (discounts have ranged from 5% to 50%). As pointed out below, the flexible discretionary nature of this process is valued by both the ACCC and practitioners. The practitioner interviewees also indicated that there was considerable uncertainty as to the prospects of negotiating successfully with the CDPP in relation to rewards for cooperation in cases involving an alleged cartel offence.[70] However, again, there was no suggestion that this is reducing the attractiveness of the AIPCC from the perspective of potential applicants.
There are also evidently various respects in which the ACCC retains and exercises discretion in connection with the conditions that determine eligibility under the AIPCC. It is significant that, as was evident from the interviews, this was not seen as a problem or as likely to undermine the efficacy of the policy. To the contrary, it was seen as beneficial. Practitioners commented that they expected and generally found the ACCC to be ‘pragmatic’ and ‘flexible’ in their administration of the policy. They rejected any suggestion that the ACCC should take a rigid ‘black letter’ approach to its interpretation of the policy and its guidelines in the interests of certainty and predictability. In addition, several reflected on how negotiations with the ACCC in relation to its exercise of discretion are assisted where there is prior familiarity, mutual respect and positive working relationship between the ACCC staff and practitioners who are regular ‘users’ of the policy.
Three examples suffice to illustrate the discretionary nature of the immunity process in practice.
First, it is a condition of eligibility under the AIPCC that the applicant is the first person to apply for immunity in respect of the cartel under the AIPCC.[71] The Interpretation Guidelines expressly exclude joint applications.[72] However, the ACCC and applicants clearly regard it as in their mutual interests that there is flexibility in the application of this condition. Consistent with this, several instances were cited in the interviews of a grant of full immunity to a party that was not first to apply under the AIPCC. Such instances include where a corporate applicant seeks to cooperate following an individual’s application, where a corporate applicant is ineligible on account of having coerced others or been a clear leader in the cartel, where there are joint applications by related corporations or by individuals, where an individual receives derivative immunity in connection with his/her role with one cartel party and seeks to cooperate in respect of his/her role with another party. In these types of matters, the relevant party or parties are given full immunity under the CPEM. Despite the risk to the AIPCC’s efficacy entailed in rewarding subsequent cooperating parties to the same extent as immunity applicants, full immunity under the CPEM appears often to be seen as the most pragmatic and constructive way to deal with situations arising under the AIPCC that are unforeseen or unusual in some respect.[73]
Secondly, it is a condition of eligibility that the applicant has not coerced others to participate in the cartel and was not clear leader in the cartel.[74] It was clear from the interviews that the ACCC exercises its discretion in that it essentially fails to apply this condition. The ACCC interviewees indicated that there has not been a matter to date in which the Commission has refused to grant immunity on the grounds of this condition and this is consistent with the views of practitioner interviewees that the ACCC takes a ‘very conservative’ approach to it (one observing that where the ACCC is part of a global process of immunity applications involving an international cartel, it ‘doesn’t even give it [referring to the condition] lipservice’, even where ‘there’s clear evidence that the immunity applicant was the leader’). Practitioners cited the Visy/Amcor cartel (Australia’s most serious case of cartel conduct to date) and the airfreight cartel as at least two instances in which immunity was granted to a so-called ‘clear leader’ (Amcor in the former and Lufthansa in the latter).
Thirdly, there is a condition that, for conditional immunity to be granted, the applicant undertakes to provide full disclosure and cooperation in the ACCC’s investigation, and for final immunity to be granted, there is ongoing disclosure and cooperation until proceedings against other cartel members are completed.[75] It is clear from the Interpretation Guidelines and from the practical experience of interviewees that this condition is an extremely onerous one and includes obligations to collect and provide information and, in the case of individuals, make them available for interviews and potentially court appearances, all generally at the applicant’s expense and in accordance with the timetable set by the ACCC.[76] That said, most practitioners expressed confidence in the reasonableness and pragmatism of the ACCC in negotiating over the nature and extent of compliance with cooperation obligations. They were confident that the ACCC would exercise discretion, and exercise it reasonably, in relation to such matters. Moreover, a number expressed the view that uncertainty as to how such matters should be handled and the potential for disputes between the ACCC and applicants in the resolution of uncertainties were minimised if the practitioner was known by and has a sufficiently good relationship with ACCC staff so as to be ‘trusted’ by such staff in their exercise of professional judgment.
IV Testing the AIPCC’s effectiveness
As explained in Part III, there are several respects in which the AIPCC or the way in which it is administered deviate from the ‘formula’ for an ‘effective’ immunity policy. However, such deviations do not necessarily mean that the Australian policy is ineffective, or less effective than it might otherwise be, and in some respects, it is evident that the deviation is seen by users and the ACCC as beneficial. Thus, the question remains: how can or should the effectiveness of the policy be tested?
According to the ACCC, and consistently with statements made concerning the benefits of immunity policies generally, the AIPCC is said to provide the benefits of:
There are significant challenges in assessing the effectiveness of any immunity policy in delivering such benefits. As previously noted, there is a significant body of economic research on this topic.[78] However, its results are to be treated with a degree of caution and, in any event, no such research has been conducted in the Australian context. This Part of the paper attempts to test the effectiveness of the AIPCC to date in relation to its stated objectives of facilitating cartel detection, prosecution and deterrence. It does so by reference to the ACCC figures and interviewee accounts. While the attempt yields some insights, it also illustrates the challenges associated with measuring the effectiveness of an immunity policy.
A Detecting cartel conduct
As previously stated, up until May this year, the ACCC had not released figures relating to the extent of use of or outcomes under the AIPCC. According to the figures released in May, there have been 110 ‘approaches’ in relation to the AIPCC in the eight year period, between September 2005 and April 2013. The ACCC defined an ‘approach’ for this purpose as ‘a contact which we receive via the immunity hotline, which we consider is relevant to the cartel provisions and which may lead to further investigation’. It has received 83 ‘first in markers’ and five ‘non first in markers’ over the same period. 22 of the ‘approaches’ did not result in a marker. Over the same period, the ACCC has received 49 proffers. 46 of these proffers resulted in a grant of conditional civil immunity and two relate to ongoing matters in which a decision as to conditional immunity has not yet been made. Of the 46 matters in which conditional immunity has been granted, there have been 9 in which final immunity has been granted and there are 16 matters in which investigations and/or proceedings are ongoing.
There are difficulties with determining the stage at or circumstances in which an immunity application should be treated as a ‘detection’ for the purposes of assessing the AIPCC’s effectiveness in facilitating cartel discovery. Marker requests do not necessarily enable the ACCC to detect cartel conduct (particularly where they are made on a hypothetical basis),[79] although such requests may raise suspicions or put the ACCC on a train of inquiry that may lead to detection. It may be misleading to treat proffers as detections given that the proffer will be accepted even though the ACCC has already detected the cartel provided it has not received written legal advice that it has sufficient evidence in relation to at least one contravention.[80] In the case of international cartels in respect of which the AIPCC application follows investigations and applications made in other jurisdictions it is also difficult to attribute detection of the relevant conduct directly to the AIPCC.
More fundamentally, without knowing the full extent of cartel conduct that has affected Australian markets over the eight year period to which the ACCC figures relate, it is impossible to know what proportion of that conduct has been the subject of an immunity application and hence to assess the extent to which the AIPCC has been effective in detecting such conduct. Nor do the ACCC figures allow for a qualitative assessment of the detections that the immunity applications to date have facilitated. It is impossible to say whether the AIPCC is enabling the most serious cartels affecting Australian consumers to be discovered and stopped or whether those cartels remain well hidden.[81]
Furthermore, the information that has emerged as a result of immunity-led proceedings against other cartel members is unlikely to divulge the full nature and extent of the cartel in question. As previously pointed out, most cartel cases in Australia are ‘settled’ under the CPEM. In practice, although this cannot be verified, it would be reasonable to assume that cases that are immunity-led are more likely to be settled than others given the extent of the information and evidence the ACCC would have available to it for the purposes of prosecuting the cartel members. However, as practitioner interviewees acknowledged, it is usual to ‘win’ significant concessions from the ACCC in relation to the admissions made and penalties imposed for the purposes of settlement. Commonly, the number of markets affected and products and parties involved will be reduced for the purposes of the agreed statement of facts presented to the Court. It is also possible to avoid any admission being made as to harm caused by the cartel in terms of an overcharge.[82]
A number of practitioner interviewees expressed the view that the AIPCC has been effective in facilitating detection. When pressed, most found it difficult to articulate a basis for this view beyond general impression. Moreover, the reasons given for the decision of a company to report (cited above) suggested that, in some cases at least, the cartel may have been reported to the ACCC even in the absence of the AIPCC. Several were of the view that the policy’s effectiveness in facilitating detection has been boosted by the introduction of criminal sanctions in this jurisdiction. However, as pointed out previously,[83] these views are contradicted by the decline in markers and proffers since the introduction of criminal sanctions in 2009 – a contradiction that underscores the caution that is warranted in relying on user views as a basis for effectiveness-testing.
B Stopping and prosecuting cartel conduct
Given that it is a condition of eligibility for immunity that the applicant ceases participation in the cartel,[84] it can be said that in 46 cases over eight years the AIPCC has been responsible for stopping cartel conduct. At the very least it has stopped the conduct on the part of the applicant and it may be assumed that, in a large proportion of cases, the withdrawal of the applicant from the cartel has led to the other cartel parties also ceasing their involvement at some point. If this was not simply the consequence of suspicions raised by the immunity applicant’s withdrawal from the cartel, it would almost certainly have been a consequence of the commencement of investigations by the ACCC. Again, however, it is impossible to know what proportion the 46 matters represent of all cartels affecting Australian markets over the eight year period to which the data relates. It may be a significant proportion. It may be insignificant. It is also arguable that in a number of these matters involving international cartels the conduct in Australia would have stopped as a consequence of overseas investigations and grants of immunity or leniency, irrespective of whether or not there was a grant of immunity under the AIPCC.
Based on the ACCC figures it is difficult to conclude that the AIPCC has been highly effective in facilitating proceedings against or prosecution of cartel conduct. While there were 46 grants of conditional immunity from civil proceedings between September 2005 and April 2013, there were only 11 cartels that were the subject of proceedings brought by the ACCC and not all of these would have been immunity-led proceedings.[85] Final immunity is generally available only after the resolution of any proceedings against cartel participants for conduct in relation to the cartel.[86] Yet final immunity has only been granted in nine (19.5%) of the 46 matters in which conditional immunity has been granted to date. There are said to be 16 ongoing matters. However, even if it is assumed that these matters will all result in proceedings (and that may be a generous assumption), then that means that just over half of the grants of conditional immunity (25 such grants or 54.3%) have led or will lead to proceedings.
Practitioner interviewees were asked about why there have not been more cartel proceedings brought given the reported number of approaches that have been made to the ACCC under the AIPCC (the ACCC figures concerning number of markers, proffers and grants of immunity were not available at the time of these interviews). Several reasons were offered in response. They included:
(1) that conditional grants of immunity can be and are granted in matters that are not actionable for some reason;[87]
(2) that the ACCC is slow in investigating - the reasons for this differed, however, some attributed it to a lack of forensic skills and training on the part of the ACCC staff and others to funding cuts and under-resourcing of the Commission;
(3) that the ACCC, at least in the past, has been too risk averse[88] and is reluctant to bring cases that test the boundaries of the law;[89] and
(4) in relation to the lack of criminal cases to date, for reasons that are not clear, the ACCC is not as committed to prosecuting cartels as it may have been a few years ago when the regime was introduced.
Moreover, the ACCC figures do not say anything about the extent to which immunity applications reduced the cost and time associated with investigations and proceedings, as compared with proceedings that may have been brought in respect of the same cartel but in the absence of any immunity application. In the most well-known immunity-led proceeding in Australia, relating to the Visy/Amcor cartel, the ACCC was put to the expense of amassing a significant body of evidence in preparation for trial before Visy ultimately capitulated and settled.[90] In relation to the airfreight cartel, many of the airlines against which the ACCC has brought proceedings have settled with the Commission. However, there are some that are contesting liability and these proceedings have proven complex and protracted.[91]
Nor do the figures indicate the outcome of the proceedings or when penalties have been imposed, their quantum, in the nine matters in which final immunity was granted (and hence, it is assumed, proceedings were brought). It is difficult to identify these matters because the ACCC generally does not report when proceedings have been brought following an immunity application and court judgments generally do not provide this information.
As to whether immunity applications will facilitate criminal prosecutions, the jury is still out – there has yet to be a prosecution in Australia. However, some have warned of the risks of prosecutorial reliance on an immunity applicant’s evidence, particularly in the context of a two party cartel.[92] Such risks were borne out in the collapsed prosecution brought by the Office of Fair Trading against British Airways and its executives in connection with the airfreight cartel.[93]
C Deterring cartel conduct
It goes without saying that the ACCC figures cannot assist in ascertaining the extent to which the AIPCC has deterred cartels from forming. In any event it is arguably meaningless to speak of the AIPCC, in isolation, as a mechanism or tool for deterrence. It is well-established in research relating to deterrence and compliance that decisions about whether comply with or break the law will depend on multiple factors.[94] Critically, though, deterrence will depend on the extent to which the potential offender knows the law and the sanctions applicable to the conduct in question, the extent to which there is a perceived risk of detection of the conduct and the extent to which there is a perceived risk that, if detected, enforcement action will be taken and sanctions applied. The University of Melbourne research referred to above indicates that a significant proportion of the Australian business community do not know the law and the sanctions applicable to cartel conduct. Knowledge of the availability of imprisonment as a sanction is particularly low. Further, even when knowledge exists, the likelihood of detection and enforcement action is also perceived as low, albeit somewhat higher when the potential offender knows that criminal sanctions apply. Even more disconcertingly, the research results indicate that a significant proportion of business people will still contemplate engagement in cartel conduct knowing what sanctions potentially apply.[95]
That said, the AIPCC clearly is relevant to perceptions of likely detection. In theory, business people contemplating engaging in cartel conduct should regard the risk of that conduct being detected, and hence the costs of such engagement, as greater in light of the AIPCC. However, the relevance of the AIPCC in this regard is premised on the potential cartelist’s awareness of the policy and his/her assessment of whether other parties to the contemplated cartel are also aware or likely to become aware thereof.
Over the last year the ACCC has engaged in a significant awareness-raising campaign, the centrepiece of which has been its film, ‘The Marker’, aimed not only at increasing awareness amongst business people of the AIPCC but more broadly at ensuring that the severity of the consequences for individuals engaging in cartel conduct are better understood.[96] The ACCC’s campaign may well have an impact, particularly at the big end of town. The film was sent to the major media outlets (TV, internet, radio, and print). It was posted on the ACCC website and YouTube and a letter about it was sent by the ACCC Chairman to the CEOs of Australia’s top 300 companies, calling on them to take steps to ensure that their workforces understand what constitutes cartel conduct and the adverse risks and consequences associated with it. Many of the CEOs of Australia’s top companies may heed the call of ACCC Chairman to educate their workforces in this fashion.
However, it is questionable whether the campaign will penetrate the consciousness of the vast majority of Australian business people in small to medium size (SME) businesses. Even if they know about the anti-cartel laws, the University of Melbourne research indicates that owners and managers in the SME sector do not tend to see these laws as relevant to their affairs.[97] Indeed, the white-collar characters and skyscraper companies depicted in ‘The Marker’ may serve to reinforce this impression. Consistent with this assessment, many of the practitioner interviewees commented that awareness of the AIPCC was not a problem amongst large companies, particularly those with in-house legal departments. For these businesses the AIPCC is an important element of the company’s compliance program. Such programs are far less common amongst SMEs. As one practitioner commented:
‘I think at [sic] the large corporations segment, there is an awareness, because for the most part, they have compliance programs and they have whistle-blower programs. That's part of the totality of the advice we give to those clients, so there is an awareness. At the SME level, I don't necessarily think there is a significant awareness, albeit my exposure to them is somewhat limited. But I am surprised constantly by franchise organisations, that one, they don't consider themselves competitors in the first place, but secondly, that there's a level of ignorance about the breadth of the cartel provisions and the immunity policy.’
The deterrence impact of the AIPCC is also premised on the assumption that, in addition to being aware of the policy, potential cartelists will assess the incentives associated with applying for immunity as greater than the disincentives. Moreover, the potential offender would need to consider that other parties to the potential cartel would be likely to make this assessment and hence regard an immunity application by one of the cartel parties as a credible threat to the cartel.
Assessing the incentives associated with making an immunity application again requires knowledge of the applicable sanctions and the perception that they are likely to be applied. In addition to escaping sanctions, incentives would include relief from the costs, disruption and reputational damage associated with investigations and proceedings. Disincentives would include the foregone profits generated by the cartel, the burden involved in the cooperation obligations imposed by the AIPCC, exposure to follow-on private actions, and the stigma and potential commercial fall-out associated with blowing the whistle. Not only are these benefits and costs inestimable but it would seem highly unrealistic to expect a potential cartelist to engage in such a weighing exercise in connection with the decision as to whether or not to engage in cartel conduct. Rather, it is an exercise more likely to become relevant at the point of deciding whether or not to apply for immunity.
V The AIPCC as an element of an overall enforcement and compliance system
It is trite to observe that immunity policies do not operate in a vacuum. They are one, albeit an important, element of an overall approach to and system for enforcement and compliance and should be seen in that light. Recognition of this should mean that the effectiveness of an immunity policy is not only measured against the objectives of the policy (as a tool for detection, prosecution and deterrence) but also against its interaction with and potential contribution towards the objectives of the overall system.
The ACCC’s Compliance and Enforcement Policy states that one of the agency’s main goals is to maintain and promote competition and remedy market failure.[98] To that end, the policy states that the ACCC takes action to:
‘stop unlawful conduct
deter future offending conduct
where possible, obtain remedies that will undo the harm caused by the contravening conduct (for example, by corrective advertising or securing redress for consumers and businesses adversely affected)
encourage the effective use of compliance systems
where warranted, take action in the courts to obtain orders which punish the wrongdoer by the imposition of penalties or fines and deter others from breaching the Act.’
The AIPCC’s relevance and contribution to stopping, deterring and prosecuting cartel conduct has been discussed. In this Part of the paper, its contribution to securing ‘remedies that will undo the harm caused by the contravening conduct’ and encouraging ‘the effective use of compliance systems’ is discussed.
A Compensation
Despite identifying compensatory measures as a key action that it takes, wherever possible, in its Compliance and Enforcement Policy, it is fair to say that the ACCC’s focus has been largely on deterrence in its anti-cartel law enforcement activities.[99] Policy questions regarding the extent to which the ACCC should focus on compensation as an objective of enforcement and how it should address tensions that arise between pursuit of such an objective and the pursuit of deterrence are large and complex ones, beyond the scope of this paper.[100] However, in the context of the AIPCC specifically, two particular issues warrant attention:
(i) Information disclosure
The question of whether information generated in the immunity process should be disclosed to private claimants has been the subject of much debate around the world.[101] On balance, the view of competition authorities is in favour of non-disclosure on the grounds that disclosure will undermine the attractiveness of the immunity policy as it will heighten the exposure of applicants to follow-on actions.[102] However, in the EU at least, this policy position has been taken in the context of more general consideration of ways in which private actions can be encouraged and facilitated.[103] In the US, there is not as much, if any, need for consideration of this kind given the high level of private litigation in that jurisdiction.[104] However, even in that jurisdiction, steps have been taken to encourage cooperation by immunity applicants with private claimants in a way that does not interfere with the DOJ’s immunity policy.[105]
The contrast between the approaches taken to the interaction between public and private enforcement in the US and EU, on the one hand, in Australia, on the other, is stark. It would be generous to say that the ACCC’s attitude towards private actions is neutral, even ambivalent. The ACCC has made it clear that it does not support disclosure of immunity information to private claimants[106] and has gone to lengths to prevent disclosure.[107] However, at the same time, the ACCC has not given any indication that it considers it necessary or appropriate that it take other steps that might facilitate an increase in the historically low level of private enforcement in this country. For example, the ACCC has not sought to facilitate the payment of compensation to victims by parties that win significant concessions from the Commission by cooperating under the CPEM. That policy states that leniency is likely to be considered for a corporation where, amongst other things, the corporation is ‘is prepared to make restitution where appropriate.’[108] However, there is no evidence that the ACCC enforces or promotes restitution as a consideration in the ‘settlement’ negotiation process relating to breaches of the competition provisions.[109] Since 2001 the ACCC has had power to bring representative proceedings seeking compensation on behalf of persons who have suffered loss as a result of a contravention of the cartel prohibitions.[110] While it has been used in respect of contraventions of the fair trading and consumer provisions,[111] the provision has never been used by the ACCC in respect of cartel contraventions.
Moreover, it is evident that the ACCC is prepared to act in ways that will hinder the prosecution of private claims for damages. In the context of settlements under its CPEM it is evident that the ACCC will agree to limiting the scope of admissions specifically to assuage the cooperating party’s concerns about exposure to follow-on actions. In one case, it was prepared to go so far as to expressly disavow any allegation of loss or harm caused by the cartel in the agreed statement of facts.[112] In recent years it has also failed to seek findings of fact in its cartel proceedings that, pursuant to the Competition and Consumer Act 2010 (s 83) would constitute prima facie evidence of such facts for the purposes of follow on actions. There is substantial uncertainty in Australia as to whether, for the purposes of s 83, admissions made in settled proceedings can be taken to findings of fact.[113] There have been calls to amend the Act to clarify that have such effect.[114] These calls have not been supported by the ACCC.
(ii) Compensation as a condition of eligibility for immunity
The 2003 version of the AIPCC made it a requirement for corporate immunity from proceedings or penalty that ‘where possible, [the corporation] will make restitution to injured parties’.[115] That requirement was based on the US DOJ’s Corporate Leniency Policy and was said to be in ‘recognition of consumers’ expectations that the applicant not be able to obtain immunity from penalty or prosecution and keep their ill-gotten gains’.[116] There is no public information available on whether or to what extent the restitution requirement was enforced against or fulfilled by applicants in the first 18 months of its operation (the ACCC received 10 applications during that time).[117] However, following the 2004 Review, the restitution condition was removed from the policy.
In explaining the decision to remove the condition, the ACCC indicated that it had been included in the policy originally out of concern that leniency applicants should not be seen to escape any payment of restitution. However, the ACCC pointed out, the experience in the US and Canada has been that private law suits generally follow an application for immunity even where no public enforcement action is taken. This reasoning is not compelling by way of justification for removing the restitution condition in Australia. It remains the case that immunity beneficiaries escape the payment of penalties. They arguably should not also escape the payment of compensation. Penalties and compensation serve entirely different purposes. Furthermore, it seems anomalous that according to the CPEM, the ACCC purportedly takes ‘preparedness to make restitution where appropriate’[118] into account in assessing what rewards should be available for cooperation. The contrast between this position and the position under the AIPCC appears difficult to justify.
It is true that injured parties have an entitlement to pursue actions for damages under the Competition and Consumer Act 2010. However, whether this is a feasible or likely pursuit in all or even most cases, is another question altogether. The conditions in Australia are much less conducive to private actions than are those in the US and Canada, as is clear from the very small handful of such actions that have been brought in recent years[119] and the challenges they have faced.[120] In the absence of other measures to support private enforcement,[121] it is arguable that the number of private actions is unlikely to climb significantly in the future. As a result there is arguably a stronger case for compensation as a condition of immunity in Australia than there is in other jurisdictions where the private enforcement climate is much more robust and/or is supported in other ways by the competition authority.
The removal of the restitution condition was justified further by the ACCC in the 2004 Review on the grounds that it would act as a disincentive to immunity applications.[122] This proposition is untested in Australia and several practitioner interviewees for the Immunity Project expressed ambivalence about it. Moreover, there have been nine years since the 2004 Review, during which time cartel offences and criminal sanctions have been introduced. The ACCC itself has acknowledged that criminal sanctions should alter significantly incentives in favour of immunity applications, implying that this may allow for a softening of its position on non-disclosure to private claimants.[123] To date, however, no such softening has been discernible.
Finally, it was said in the context of the 2004 Review that victims may be too difficult to identify and loss too difficult to quantify, making a restitution condition unworkable and practically burdensome.[124] This argument against having such a condition in the AIPCC was relied on by a number of the practitioner interviewees in speaking against the re-introduction of the restitution condition. The argument has some force. There are good reasons to consider that private plaintiffs may be in a better position to do the work of identifying victims and quantifying loss than the ACCC, an agency that has other legitimate objectives and finite resources with which to pursue them. However, this should not necessarily mean that the ACCC cannot and should not take steps to facilitate this process where it is possible and feasible to do so. It could consider, for example, making it a condition of eligibility for immunity that corporate applicants acknowledge any harm caused by the cartel and identify, to the extent possible, the persons or classes of persons likely to have suffered loss as a result. It could also make such a condition relevant to the benefits it is prepared to offer cooperating parties under the CPEM.[125]
B Compliance
It is implicit, if not explicit, in the ACCC’s Compliance and Enforcement Policy that the ACCC considers measures to foster and facilitate compliance by the Australian business community as much of a priority as enforcement action. The relationship between compliance and the AIPCC should be seen as a reciprocal mutually reinforcing one for at least the following reasons.[126]
It was evident from both the practitioner and ACCC interviews for the Immunity Project that often it is the information received by business people through compliance training and programs that leads to the discovery of cartel conduct and subsequently to an approach to the ACCC that may result in a marker request, if not an application for immunity. One practitioner also observed that explanations provided regarding the AIPCC in compliance programs and training assist in deterrence ‘...because it is creating in the minds of business executives that are aware of it, a greater sense of detection.’ This experience underscores the importance of compliance programs to the efficacy of the AIPCC as a detection and deterrence device and of the value of the ACCC’s work in promoting such programs – particularly in the SME sector.[127]
At the same time, the AIPCC should be seen as presenting an opportunity for engendering a greater level of compliance in the Australian business community. Under the CPEM, a relevant factor in assessing the type and degree of leniency afforded to cooperating parties is stated as whether the corporation ‘is prepared to take immediate steps to rectify the situation and ensure that it does not happen again, undertakes to do so and complies with the undertaking’.[128] There is no equivalent eligibility condition, indeed no reference at all to compliance, in the AIPCC.[129] This is arguably incongruous and a missed opportunity.
Practitioner interviewees observed that, as a matter of course, a corporate immunity applicant will introduce or review its compliance program as a result of its experience in discovering cartel conduct within the corporation and applying for immunity (one describing it as an ‘unwritten condition’ under the AIPCC, and another pointing out that, for public companies, accountability to shareholders compels the institution of a ‘souped up compliance program’ by immunity applicants). However, they also all agreed that, as a matter of good public policy, consistency with the treatment of cooperating parties under the CPEM and ‘sending the right message’, compliance should be incorporated as a condition of eligibility under the AIPCC. None of the practitioner interviewees considered that such a condition would deter immunity applications.
The ACCC interviewees, however, expressed some reservations about adding a potential disincentive to immunity applications. These interviewees also pointed out that there is or should not be a ‘one size fits all’ approach to compliance programs – self-evidently, a program for a large company operating in many markets in more than one country would have to differ in scale and scope to that required, if one was required at all, for a sole trader or small business. However, there is no reason why a compliance condition could not be sensibly qualified to accommodate such differences. ACCC interviewees further appeared to suggest that adding such a condition would be futile given that most of the corporate immunity applicants with which they have dealt to date already had compliance programs in place at the time of the conduct. However, a condition that required the applicant to update, revise or reinforce its program would readily address such situations and serve the overall policy objective of encouraging ‘the effective use of compliance systems’.
VI The AIPCC and ACCC governance
The ACCC’s Compliance and Enforcement Policy spells out the principles that guide its decisions and activities in enforcing the competition rules. The first such principle is transparency.[130] It is explained as follows:
‘Transparency
Contrary to this principle the ACCC has been entirely non-transparent in reporting on the use of or outcomes under the AIPCC.
In its 2004 Review of the policy the ACCC appeared to recognise the importance and value of transparency in an immunity program. To this end it concluded that it would ‘include information in its annual report about the number of leniency applications during that financial year where appropriate.’[131] It did not identify when including such statistical information in its annual reports could be seen as inappropriate. It also stated that, after consulting with the immunity applicant, it would consider whether to include information concerning an immunity applicant and application in media releases issued at the point of commencing or concluding a proceeding.[132] It did not explain why it was considered necessary to consult with an immunity applicant about such matters if (as is assumed was intended) references in press releases would not disclose confidential information.
However, since 2004, the ACCC has done very little to enhance transparency in AIPCC reporting.[133] A review of its annual reports since 2005-2006 indicates that the ACCC generally does not report on the use of or outcomes under the AIPCC. General references are made to the AIPCC in the context of reporting on Key Performance Indicators.[134] However, specific information about the numbers of approaches, markers, proffers or grants of conditional or final immunity or the number and outcomes of immunity-led proceedings is not provided.[135] One practitioner interviewee commented that a potential downside associated with such reporting is that, if the figures are low, it may suggest that the policy is not functioning as it should and that may reduce its effectiveness as a deterrent. However, he also conceded that low figures relating to the number of applications could also be interpreted as indicating that the AIPCC is acting as a deterrent and that there are fewer cartels as a result.
A review of media releases regarding the commencement and conclusion of cartel proceedings since 2005 found only one media release in which the grant of immunity was referred to and this related to the Visy cartel case.[136] In other cases it is possible that the ACCC consulted with the immunity applicant about disclosure in media releases and upon meeting resistance, decided not to disclose. It is equally possible that the ACCC did not consult with the applicant but simply decided unilaterally not to make any mention of the immunity application in any media release.
It is also apparent that the ACCC does not disclose the fact of an immunity application, let alone the identity of the applicant or any other aspect of an immunity application, to the Court in the context of proceedings against or submissions on penalties relating to the other cartel parties. At least, as much is suggested from the lack of references to such matters in cartel judgments. A review of these judgments since 2005 found only one in which mention was made of a grant of immunity and again, that related to the Visy cartel.[137]
For the purposes of its current review, the ACCC has again favoured a non-transparent approach. It has indicated that initially it is undertaking consultations internally, with members of the office of the CDPP and with a select group of practitioners who are regular users of the policy. It has suggested that if significant issues are identified in connection with the policy in this initial phase then it will consider a broader and potentially public consultation process.
The initial phase of the process described by the ACCC should be useful in understanding the perspectives and identifying any issues associated with the operation of the AIPCC by important stakeholders. However, it is essential that the ACCC then conduct a formal public review in similar fashion to the 2004 Review, publishing a discussion article inviting comments from any interested parties followed by a response or position article setting out the ACCC’s views on the issues, having taken submissions into account, and its proposed changes, if any to the AIPCC and its administration. This is standard practice in other jurisdictions.[138] For a policy of this significance, sound public administration demands no less. Moreover, a public review would be likely to attract media attention hence would provide an invaluable opportunity to build on the ACCC’s recent efforts to boost awareness of the policy and to educate the business sector (particularly in SMEs) about the law and sanctions applicable to cartel conduct in this country.
In upholding a general principle of transparency, it is not suggested that the ACCC report confidential information provided by immunity applicants. However, greater reporting in relation to the AIPCC, such as statistics relating to its use and, when proceedings are commenced or at least when they are concluded, the identity of immunity applicants, should be undertaken as a matter of transparent and accountable public administration.[139] Such reporting would also arguably enhance the AIPCC’s effectiveness in detecting and deterring cartel conduct as it would provide an additional avenue for publicising the policy and its use by the business community.
VI Conclusion
The case-study of the Australian experience with its immunity policy reported on this paper demonstrates the value to be derived from a more searching critical analysis of immunity policies than is generally reflected in the approach taken by competition authorities to such policies.
It reveals that while the orthodox principles espoused by competition authorities in relation to immunity policy design and administration make sense in theory, their strict application may not necessarily be realisable or even desirable in practice. Thus, assessing the likely effectiveness of an immunity policy by reference to the extent to which it reflects these principles may be an exercise of limited utility. The Australian experience suggests that the formula advocated for immunity policy design and administration is over-simplified and that there are significant insights available from appreciating the nuanced way in which such policies work in practice in specific jurisdictions.
First, in terms of sanction severity, the Australian experience to date has been that the harshness of the sanctions applicable to cartel conduct does not appear to bear significantly on the extent to which immunity applications are made. Indeed, while it may be too early to make a definitive assessment, there are signs that the introduction of criminal sanctions, including jail time for individuals, has undermined the strength of the AIPCC.
Secondly, fear of detection by cartelists is not a paramount driver of such applications in this jurisdiction. There are other, more influential, factors at work. These include an alignment between reporting cartel conduct and the corporate culture in many large Australian companies, and the flow-on effects of immunity applications made overseas in respect of conduct potentially affecting Australian markets.
Thirdly, a certain amount of uncertainty and discretion by the ACCC in its interpretation and administration of the AIPCC is not only expected but seen as beneficial by both the Commission and practitioners who advise immunity applicants. Such discretion is often exercised in relation to the scope of and conditions of eligibility under the policy as well as in relation to the consequences for parties that are, for one reason or another, ineligible. With respect to the latter, the ACCC relies heavily on the non-transparent, highly discretionary nature of the CPEM to provide cooperating parties that are ineligible under the AIPCC with the same degree of immunity as is available under that policy.
The case-study illustrates the formidable challenges involved in attempting to assess the effectiveness in practice of an immunity policy in facilitating detection, prosecution and deterrence of cartel conduct. One approach to such assessment entails a numerical examination of applications and outcomes. That is, the number of applications is taken to indicate the extent to which the policy has been used and thus the degree to which the policy has been effective in facilitating detection of and stopping cartel conduct. The number of proceedings brought (or in administrative systems, infringement decisions made), the number of those that resulted in a finding of liability / infringement and the quantum of penalties imposed on the other cartel members are taken to indicate the extent to which the policy has been effective in facilitating the prosecution of cartel conduct. Based on assumptions about the effects that publicised proceedings and penalties have on the perceptions and behaviour of potential cartel offenders, these numbers might also be taken to indicate the degree of effectiveness of the policy in achieving general deterrence.
The case study demonstrated the substantial limitations of such an approach. First, it is contingent on the competition authority disclosing information about the use of and outcomes pursuant to its immunity policy. This has not been the practice of the ACCC. Not only has it not published figures relating to the number of applications and grants of immunity made under the AIPCC until very recently, it also does not generally disclose the fact of an immunity application when proceedings are brought or concluded as a result of it. Secondly, even when such information is available, it says nothing about the nature or extent of unreported cartel activity taking place. Hence, it is impossible to know what proportion of cartel activity affecting the Australian economy is being detected, stopped and prosecuted by reason of the immunity policy. Thirdly, assumptions about the effects of publicised proceedings and penalties on general deterrence are problematic in that they are insensitive to the complexity that attends business people’s decision-making processes in relation to compliance.
A modified but still largely numerical approach to effectiveness-testing involves focussing on the quality rather than the volume of usage and outcomes pursuant to an immunity policy. It examines the extent to which the policy is yielding detection and prosecution of the most serious cartels, based on proxies for harm such as the scope and duration of the cartel. This approach is also dependent on information disclosure by the competition authority and, again, it provides an incomplete picture. This is not only because it does not reveal those cartels that do not fall into the immunity net. It is also because the immunity application itself and the process of cooperation by the other cartel members create at best a distorted, at worst a false, representation of the cartels that are detected and prosecuted pursuant to the immunity policy. The account given by the immunity applicant of the cartel will be influenced by the extent of the applicant’s knowledge of the cartel’s operations and that knowledge may not be complete – in the case of a marginal or late cartel member, it may be considerably deficient. Nevertheless it is that account which provides the roadmap and frames the competition authority’s understanding and investigation of the cartel. Even if a fuller picture emerges subsequently, as it often does, through the authority’s investigation, it is not always the same as the picture that becomes the public record of the cartel. The extent of admissions made by and penalties imposed on other cartel members will be influenced, sometimes significantly, by ‘deals’ that are done by the authority in return for cooperation.
Another approach is a more qualitative one that involves asking stakeholders who have experience in using the policy for their views of its effectiveness. The value in making such an inquiry of a competition authority is curtailed inevitably by the authority’s vested interest in attesting to the policy’s effectiveness. The value in making the inquiry of users, be they practitioners or business people who have been applicants under the policy, may be greater but there remains a problem of bias in favour of positive views of a policy that, for practitioners at least, is a source of lucrative work. Furthermore, the views that would be elicited from such individuals are by their nature anecdotal or impressionistic and may also be influenced by the individual’s concern to preserve their relationship with the authority. A guarantee of anonymity may not overcome this difficulty where, as in Australia, the pool of users and number of immunity matters is so small as to enable identification even without disclosure of sources.
In contrast to its limited results in relation to the AIPCC’s performance as a tool for detection, prosecution and deterrence, the case-study highlights the benefits in evaluating an immunity policy’s contribution to the effectiveness of the overall system for promoting anti-cartel law enforcement and compliance.
In Australia, the administration of the AIPCC has been undertaken largely without regard to its interaction with other aspects of and mechanisms for facilitating enforcement and compliance. The ACCC’s approach to the issues raised by disclosure of immunity information to private claimants is illustrative. These issues have been approached by the Commission in a narrow and unidirectional fashion. The focus has been almost entirely on the threat that disclosure might pose to future use of the policy. The ACCC has evidenced little if any concern for the impact on private actions, reflecting the more general malaise in this country regarding the need to foster a climate conducive to private enforcement in furtherance of general objectives of compensation and deterrence. Consistently with this attitude, the ACCC has eschewed any attempt to use the AIPCC as a mechanism for facilitating redress for cartel victims in that it has shown no interest in making cooperation with private claimants, let alone the payment of compensation, a requirement under the policy.
The ACCC also appears to have failed to appreciate the potential positive interaction between its immunity policy and the promotion of compliance. Making the establishment or refurbishment of a compliance program a condition of eligibility under the AIPCC seems an obvious commonsense measure that would bolster the ACCC’s efforts to inculcate a greater ‘culture’ of compliance in the Australian business community.
Finally, as a crucial and arguably controversial enforcement tool, it is vital that the administration of an immunity policy conform to the general governance principles of the competition authority. Identifying and upholding such principles are essential in justifying the immense public power vested in such authorities, in holding authorities accountable for their exercise of such power, and in safeguarding those subject to the power from its abuse.
The ACCC’s administration of the AIPCC has been inconsistent with the principle of transparency which it has identified as a key aspect of its governance charter. Reporting non-confidential information about applications and outcomes under the AIPCC would correct this inconsistency and would do so without in any way damaging the policy. If anything, in publicising the use and outcomes of the AIPCC, a practice of reporting should contribute to the policy’s effectiveness in providing its stated benefits of detecting, prosecuting and deterring cartel conduct.
Appendix
Australian Interviewees for the Immunity
Project
*Melbourne Law School, University of Melbourne. The author is grateful to Imme Kaschner and Rosemary Humberstone for research assistance. The usual disclaimers apply.
** This is a draft paper and is not to be cited or distributed without the permission of the author. Comments and feedback are most welcome. The author can be contacted at c.beaton-wells@unimelb.edu.au.
1 A descriptor originating, it seems, in OECD, Recommendation of the Council concerning Effective Action against Hard Core Cartels (C(98)35/FINAL, 14 May 1998), intended to direct the toughest sanctions at cartel conduct at the most serious end of the spectrum of economic harm.
[2] For convenience, this paper uses the term ‘immunity’. That is also the term used in Australia, the jurisdiction that is the focus of this paper.
[3] See generally C Leslie, ‘Antitrust Amnesty, Game Theory and Cartel Stability’ (2006) 31 Journal of Corporation Law 453; C Leslie, ‘Trust, Distrust and Antitrust’ (2004) 82 Texas Law Review 515; G Spagnolo, ‘Leniency and Whistleblowers in Antitrust’, CEPR Discussion Paper No. 5794, Centre for Economic Policy Research, August 2006. In relation to the ACCC Immunity Policy specifically, see C Truong, ‘The ACCC’s Immunity Policy: A New Application of the “Prisoner’s Dilemma”’ (2007) 15 Trade Practices Law Journal 219.
[4] TO Barnett, ‘Seven Steps to Better Cartel Enforcement’, in C-D Ehlermann and I Atanasiu (eds), European Competition Law Annual 2006: Enforcement of Prohibition of Cartels, Hart Publishing, Oxford, 2007, p141, pp146–8.
[5] G Spratling, ‘Detection and Deterrence: Rewarding Informants for Reporting Violations’ (2001) 69 George Washington Law Review 798; G Spagnolo, ‘Divide et Impera: Optimal Leniency Programmes’, CEPR Discussion Paper No 4840, Centre for Economic Policy Research, December 2004.
[6] W Wils, ‘Leniency in Antitrust Enforcement: Theory and Practice’ (2007) 31 World Competition: Law and Economics Review 35.
[7] S Hammond, ‘The Evolution of Criminal Antitrust Enforcement over the Last Two Decades’, Article at the 24th annual National Institute on White Collar Crime conference, presented by the American Bar Association Criminal Justice Section and Center for Continuing Legal Education, February 25 2010, p. 1.
[8] Representative of such advocacy, the United States Department of Justice Deputy Assistant Attorney General has declared: ‘[t]he single most significant development in cartel enforcement is the proliferation of effective leniency programs..’: see S Hammond ‘The Evolution of Criminal Antitrust Enforcement over the Last Two Decades’, Paper at the 24th annual National Institute on White Collar Crime conference, presented by the American Bar Association Criminal Justice Section and Center for Continuing Legal Education, February 25 2010, p. 1.
[9] The defensive position taken by competition authorities on the issue of disclosure of immunity information to private claimants is a case in point. See the discussion in Part VA(i) below.
[10] G Spagnolo, ‘Leniency and whistleblowers in antitrust’ in Buccirossi, P., editor, Handbook of Antitrust Economics, (2008 MIT Press) ch 7, p259.
[11] C Parker, ‘The war on cartels and the social meaning of deterrence’ (2013) 7 Regulation & Governance 174.
[12] For discussion of the revisions and the application of the DOJ Antitrust Division's Corporate Leniency Policy, see ‘Frequently Asked Questions Regarding the Antitrust Division's Leniency Program and Model Leniency Letters,’ by S Hammond and B Barnett (November 19, 2008); ‘When Calculating the Costs and Benefits of Applying for Corporate Amnesty, How Do You Put a Price Tag on an Individual's Freedom?,’ speech by S Hammond, Fifteenth Annual National Institute On White Collar Crime (March 8, 2001); ‘Detecting And Deterring Cartel Activity Through An Effective Leniency Program,’ speech by S Hammond, before International Workshop on Cartels (November 21-22, 2000); ‘Making Companies An Offer They Shouldn't Refuse,’ speech by G Spratling, before Bar Association of the District of Columbia's 35th Annual Symposium on Associations and Antitrust (February 16, 1999); ‘The Corporate Leniency Policy: Answers To Recurring Questions,’ speech by G Spratling, before ABA Antitrust Section 1998 Spring Meeting (April 1, 1998).
[13] S Hammond, ‘Cornerstones of an effective leniency program’, speech at ICN workshop on leniency programs, Sydney, 22-23 November 2004.
[14] S Hammond, ‘Cornerstones of an effective leniency program’, speech at ICN workshop on leniency programs, Sydney, 22-23 November 2004, pp4-5.
[15] See, eg, OECD, ‘Fighting Hard Core Cartels: Harm, Effective Sanctions and Leniency Programmes’ (2002); OECD, ‘Leniency for Subsequent Applicants’ DAF/COMP(2012)25; ICN, ‘Anti-Cartel Enforcement Manual, Cartel Working Group, Subgroup 2 – Enforcement Techniques’, Chapter 2: Drafting and Implementing an Effective Leniency Program, April 2006; ICN, ‘Anti-Cartel Enforcement Manual, Cartel Working Group, Subgroup 2 – Enforcement Techniques’, Compilation of “Good Practices” from the Anti-Cartel Enforcement Manual of the ICN Cartel Working Group, April 2011; ECN, ‘Model Leniency Programme’, November 2012.
[16] See, eg, the reviews undertaken in the last five years by the United Kingdom’s Office of Fair Trading (‘Applications for leniency and no-action in cartel cases: a consultation on OFT guidance (October 2011), OFT803con); the New Zealand Commerce Commission (‘The Commerce Commission’s draft revised Leniency Policy: Explanatory note’, 2009); the Competition Commission of Singapore (‘Consultation documents on guideline on lenient treatment for undertakings coming forward with information in cartel activity cases’, 2008) and the Irish Competition Authority (‘Cartel Immunity Programme Review’, 2010).
[17] In the case of the theoretical literature, for example, the models that have been developed are often limited by the need to make unrealistic assumptions for tractability reasons. Many aspects of reality are excluded such as asymmetric information between firms, mistakes in law enforcement and uncertainty firms face about the level of fines, profitability of the cartel or defection and future market conditions. All of these factors influence a firm’s willingness to participate in a cartel, willingness to remain in a cartel and also their propensity to report a cartel to the authorities. The theoretical studies are also limited by the fact that they tend not to reflect differences between specific policies. See Kobayashi, B. H. ‘Antitrust, agency, and amnesty: An economic analysis of the criminal enforcement of the antitrust laws against corporations’ (2001) 69 The George Washington Law Review 715. In the case of the empirical literature, it is unclear how success is to be measured because it is impossible to know how many undetected cartels exist or how many have been deterred from forming or even how many have formed. See J Zhou, ‘Evaluating leniency with missing information on undetected cartels: Exploring time varying policy impacts on cartel duration’ (2012) SSRN working paper 1985816. Furthermore, it is difficult to establish how many cartels would have ended irrespective of the existence of the immunity policy. See S Arlman, ‘Crime But No Punishment An empirical study of the EU’s 1996 Leniency Notice and cartel fines in article 81 proceedings’ (2005) Master’s thesis, Universiteit van Amsterdam. A further difficulty with those studies that attempt to measure immunity policy effectiveness by reference to cartel duration is that it is difficult to differentiate between the long and short term effects of the policy, that is to determine when the short term ends and the long term starts. This is important because cartels already exist that would not have formed if a policy was in place, while others may form after a policy has been introduced that would not have formed otherwise. While many studies make some effort to separate out the long and short term, there is no consensus on which method is most accurate. Additionally, some papers do not make any attempt and so consequently may have biased results. Another limitation with the research is the difficulty that researchers have in determining what element of antitrust policy was responsible for the observed effects. There were a number of different elements to the immunity policy that were introduced at the same time, such as amnesty, and increase in fines and changes to individual liability, but it is not clear which of these factors is most important. Finally, a weakness of many papers is the use of duration data that is susceptible to measurement error. See A Dick, ‘When are cartels stable contracts?’ (2006) 39 Journal of Law and Economics 241. First, often the start and end dates are negotiated by the firms and the competition authorities as part of the terms of the immunity agreement. Second, it may not be clear, even to the firms, when the cartel actually started. Furthermore, the duration of cartels is often not symmetric across firms as firms may have joined and left the cartel at different dates. See O De, ‘Analysis of cartel duration: Evidence from EC prosecuted cartels’ (2010) 17(1) International Journal of the Economics of Business 33. These factors could lead to biased estimates, although it is unclear which direction the estimates would be biased.
[18] See, eg, Brenner finding that leniency policies have no effect on deterrence (S Brenner, ‘An empirical study of the European corporate leniency program’ (2009) 27(6) International Journal of Industrial Organization 639), while Miller finds that there is a 59% increase in deterrence (N H Miller, ‘Strategic leniency and cartel enforcement’ (2009) 99(3) American Economic Review 750).
[19] This is a particular weakness of the experimental research that involves experiments conducted in university computer laboratries using university students as subjects under standard experimental settings. See, eg, J Apesteguia, M Dufwenberg and R Selten, ‘Blowing the whistle’ (2007) 31(1) Economic Theory 143; J Hinloopen and A R Soetevent, ‘Laboratory evidence on the effectiveness of corporate leniency programs’ (2008) 39(2) RAND Journal of Economics 607; M Bigoni, S Fridolfsson, C Le Coq, and G Spagnolo, ‘Fines, leniency and rewards in antitrust: An experiment’ (2012) 43(2) The RAND Journal of Economics, 368. The results from such studies must be considered in light of the following limitations. First, since these experiments are conducted on university students who are paid small amounts of money relative to the amounts that firms and cartels are earning, it is therefore difficult to know whether the results ‘scale’ well to the type of situation under study. Similarly, it is also not clear whether university students have the same risk preferences as business executives. They may not have the same perspectives and experiences as firm employees, although it is not obvious what implications this would have on their decisions. Finally, cartels are often built on trust, which usually means personal relationships. It is thus not clear what impact being able to meet and discuss face-to-face, or the possibility of having worked together in other capacities, could have on a person’s desire and willingness to collude in an illegal way. This is not captured in the experiments as subjects are not allowed to communicate other than through a computer system.
[20] U Blum, N Steinat, and M Veltins, ‘On the rationale of leniency programs: A game theoretical analysis’ (2008) 25(3) European Journal of Law and Economics 209; J Harrington, ‘Corporate leniency programs and the role of the antitrust authority in detecting collusion’ (2010) (Unpublished).
[21] D Sokol, ‘Cartels, Corporate Compliance and What Practitioners Really Think About Enforcement (2012) 78 Antitrust Law Journal 201.
[22] OFT 1132, An Assessment of Discretionary Penalties Regimes, October 2009.
[23] D Sokol, ‘Cartels, Corporate Compliance and What Practitioners Really Think About Enforcement (2012) 78 Antitrust Law Journal 201, 203.
[24] See, eg, G Schnell and A Dumas-Emard, ‘How to catch a thief – Corporate Leniency and the Irrepressible Challenge of Cartel Detection: Finding a Better Way’ (2011) 2 CPI Antitrust Chronicle; D Sokol, ‘Detection and Compliance in Cartel Policy’ (2011) 2 CPI Antitrust Chronicle.
[25] In an Australian context, see, eg S Lynch, 'The Case for Increased Private Enforcement of Cartel Laws in Australia' (2011) 39(6) Australian Business Law Review 385; C Cavallaro, K Stellios,'Immunity: A dilemma for both Whistleblowers and the ACCC' (2011) 19 (3) Australian Journal of Competition and Consumer Law 163; C Beaton-Wells, ‘Forks in the Road: Challenges Facing the ACCC’s Immunity Policy for Cartel Conduct: Part 1’ (2008) 16 Competition & Consumer Law Journal 71 2009; C Beaton-Wells and B Fisse, Australian Cartel Regulation: Law, Policy and Practice in an International Context (CUP, 2011) 405–19 [10.3], 517– 27 [11.5]. See further the discussion in Part V below.
[26] See N Purnell QC, ‘Criminal Cartel Enforcement: More Turbulence Ahead? Implications of the BA/Virgin case’ (2010), Issue 11 (Autumn), Cloth Fair Chambers; K Edghill, ‘Is the UK Cartel Offence Dead or is there a Problem with Immunity: The role of immunity as a prosecutorial tool in criminal cartel offences in the United Kingdom and Australia’, Article at UNISA Competition Law Workshop, 2011.
[27] J Murphy, Article for OECD Roundtable, ‘Promoting Compliance with Competition Law’, DAF/COMP(2011)5, 7 Oct 2011, [26]-[37]; C Beaton-Wells, ‘Normative Compliance – The End Game’, CPI Antitrust Chronicle, February 2012(1).
[28] See ‘The Cartel Project’ at http://www.law.unimelb.edu.au/cartel.
[29] See, eg, C Beaton-Wells and K Tomasic, ‘Private Enforcement of Competition Law: Time for an Australian Debate’ (2012) 35(3) UNSW Law Journal 650.
[30] ACCC, ACCC Leniency Policy for Cartel Conduct, June 2003.
[31] ACCC Immunity Policy for Cartel Conduct, July 2009.
[32] ACCC, ACCC immunity policy interpretation guidelines, July 2009.
[33] See the interview with former ACCC Chairman, Graeme Samuel, in A Caldwell, ‘ACCC Calls for Harsher Penalties for Cartels’, Australian Broadcasting Corporation transcripts, 2 November 2007; G Samuel, ‘Delivering for Australian Consumers: Making a Good Act Better’, Speech delivered at the National Press Club of Australia, Canberra, 25 June 2008.
[34] More specific figures have been provided to the author for the purposes of this paper and are referred to below.
[35] R Sims, ‘Opening Address’ at IBA Competition Conference, 21 March 2013, Sydney.
[36] ACCC, ‘ACCC and CDPP Outline Arrangements for Cartel Conduct Immunity’, News Release, NR 338/08, 1 December 2008.
[37] CDPP, Prosecution Policy of the Commonwealth, 1992 (as amended March 2009), Annexure B.
[38] See ACCC, Review of ACCC’s Leniency Policy for Cartel Conduct, Discussion Paper, 24 November 2004; ACCC, ACCC Position Paper, Review of ACCC’s Leniency Policy for Cartel Conduct, 26 August 2005.
[39] M Bezzi, ‘The ACCC Immunity Policy for Cartel Conduct: Review of Operation of the Policy’, Presentation at Competition Law Conference, Sydney, 4 May 2013.
[40] M Bezzi, ‘The ACCC Immunity Policy for Cartel Conduct: Review of Operation of the Policy’, Presentation at Competition Law Conference, Sydney, 4 May 2013.
[41] S Hammond, ‘Cornerstones of an effective leniency program’, speech at ICN workshop on leniency programs, Sydney, 22-23 November 2004, p7.
[42] See the discussion in C Beaton-Wells and B Fisse, Australian Cartel Regulation: Law, Policy and Practice in an International Context (CUP, 2011), pp425-8.
[43] S Hammond, ‘Cornerstones of an effective leniency program’, speech at ICN workshop on leniency programs, Sydney, 22-23 November 2004, pp8-9.
[44] See ss 76(1A), 76(1B), 44ZZRF(3), 44ZZRG(3) of the Competition and Consumer Act 2010.
[45] Trade Practices Review Committee, Review of the Competition Provisions of the Trade Practices Act, 2003, [10.2].
[46] For discussion of the approach taken to negotiated penalties under the CPEM, see C Beaton-Wells and B Fisse, Australian Cartel Regulation: Law, Policy and Practice in an International Context (CUP, 2011), pp433-446.
[47] See further Part IVA below.
[48] See Trade Practices Review Committee, Review of the Competition Provisions of the Trade Practices Act, 2003, ch10.
[49] See n 33 above.
[50] See further Part VI below.
[51] For background, see C Beaton-Wells, ‘Australia's Criminalisation of Cartels: Will It Be Contagious?’ in J Rexl et al (eds), More Common Ground for International Competition Law?, Academic Society for Competition Law Series, Edward Elgar, Cheltenham, UK, 2011, ch 9, pp148-173.
[52] Introduced by the Trade Practices Amendment (Cartel Conduct and Other Measures) Act 2009.
[53] See s 79(1)(e) of the Competition and Consumer Act 2010.
[54] See, eg, G Samuel, ‘The Relationship between Private and Public Enforcement in Deterring Cartels’, Paper at International Class Action Conference (25 October 2007) 8.
[55] See C Beaton-Wells and C Parker, 'Justifying criminal sanctions for cartel conduct: A hard case' Journal of Antitrust Enforcement (2012), pp1-22 doi:10.1093/jaenfo/jns009; C Parker and V Nielsen, ‘Deterrence and the impact of calculative thinking on business compliance with competition and consumer regulation’ (2011) 56(2) Antitrust Bulletin 377; C Parker, ‘The war on cartels and the social meaning of deterrence’ (2013) 7 Regulation & Governance 174. See also M Stucke, ‘Am I a Price Fixer? A Behavioural Economics Analysis of Cartels’ in Beaton-Wells, C and Ezrachi, A (eds), Criminalising Cartels: Critical Studies of an International Regulatory Movement (Hart, 2011), ch 12.
[56] ACCC, ACCC Immunity Policy Interpretation Guidelines, July 2009, [31].
[57] See the discussion in C Beaton-Wells, ‘The ACCC Immunity Policy for Cartel Conduct: Due for Review’ (2013) Australian Business Law Review (August issue, forthcoming), Part IVD.
[58] S Hammond, ‘Cornerstones of an effective leniency program’, speech at ICN workshop on leniency programs, Sydney, 22-23 November 2004, pp9-10.
[59] S Hammond, ‘Cornerstones of an effective leniency program’, speech at ICN workshop on leniency programs, Sydney, 22-23 November 2004, p10.
[60] S Hammond, ‘Cornerstones of an effective leniency program’, speech at ICN workshop on leniency programs, Sydney, 22-23 November 2004, pp11-12.
[61] See Beaton-Wells, C., Parker, C.E., 2012, Education before enforcement? Key insights from Australian cartel research, CPI Antitrust Chronicle, vol 10, issue 1, Competition Policy International, pp. 1-7. For a full report on this research, see C Parker and C Platania-Phung, ‘The Deterrent Impact of Cartel Criminalisation: Supplementary Report on a Survey of Australian Public Opinion Regarding Business People's Views on Anti-Cartel Laws and Enforcement' (Report), 12 January 2012, at http://www.law.unimelb.edu.au/files/dmfile/ParkerandPlataniaPhungImpactofDeterrencerevisedtitle1.pdf
[62] The ACCC has powers relating to compulsory information gathering, search and seizure, telecommunications data and interceptions, and covert surveillance.
[63] See C Parker and V Nielsen, V, ‘The Fels effect: responsive regulation and the impact of business opinions of the ACCC’ (2011) 20(1) Griffith Law Review 91.
[64] See s 5(1) of the Competition and Consumer Act 2010.
[65] See s 77(2) of the Competition and Consumer Act 2010.
[66] See C Beaton-Wells and B Fisse, Australian Cartel Regulation (2011, CUP), section 3.4, pp47-57.
[67] As one practitioner explained: ‘It seems from my experience that a number of the matters are flow-ons from overseas, so conduct has occurred in other countries, the decision has already been made to seek immunity or co-operate in those countries, and then there is that flow-on impact of okay, where else should we be seeking immunity. In those situations you may not actually be asked to give initial advice. The decision is really just to adopt a consistent approach to the alleged conduct, and that is, if you're seeking immunity in some countries then you would seek it here.’
[68] S Hammond, ‘Cornerstones of an effective leniency program’, speech at ICN workshop on leniency programs, Sydney, 22-23 November 2004, p18.
[69] S Hammond, ‘Cornerstones of an effective leniency program’, speech at ICN workshop on leniency programs, Sydney, 22-23 November 2004, p19.
[70] The CDPP’s approach to such ‘negotiations’ is far removed from both the ACCC’s approach to settlement under the CPEM, as well as the approach taken in the US to plea bargaining (see the description of the US approach in Organisation for Economic Co-operation and Development, Directorate for Financial and Enterprise Affairs Competition Committee, ‘Plea Bargaining/Settlement of Cartel Cases’, DAF/COMP(2007)38 (22 January 2008) 149–203). In short, it is a far more conservative approach. The CDPP will not ‘bargain’ as to the facts to be presented to the court upon a guilty plea and nor will it agree a recommendation as to sentence. At best, it will negotiate different and/or fewer charges to which a defendant may choose to plead guilty and may decide that it will not oppose a defence submission on sentence and inform the defendant and court accordingly (see Commonwealth Director of Public Prosecutions, Prosecution Policy of the Commonwealth (1992) [6.21]).
[71] ACCC, ACCC immunity policy for cartel conduct, July 2009, [8], condition (a)(iii).
[72] ACCC, ACCC immunity policy interpretation guidelines, July 2009, [25].
[73] Unlike the approach taken in other jurisdictions, neither the CPEM nor the AIPCC provide a transparent tiered approach to rewards for subsequent co-operators (second-in, third-in, etc). The CPEM provides the ACCC with significant discretion and flexibility in determining the conditions on which it will deal with cooperating parties and the nature and extent of the benefits that it will offer such parties in return for cooperation. Such benefits can take the form of complete or partial immunity from action by the ACCC, negotiation of agreed facts and joint submissions to the court for a reduction in penalty based on those facts or even administrative settlement in lieu of litigation. See ACCC, Cooperation Policy for Enforcement Matters 2002, 1.
[74] ACCC, ACCC immunity policy for cartel conduct, July 2009, [8], condition (a)(iv).
[75] ACCC, ACCC immunity policy for cartel conduct, July 2009, [8], condition (a)(vii), [10], [19].
[76] ACCC, ACCC immunity policy interpretation guidelines, July 2009, [77]-[80].
[77] ACCC, ACCC immunity policy interpretation guidelines, July 2009, [1]-[7]. The ultimate objective of detecting, stopping, prosecuting and deterring cartel conduct is identified by the ACCC as protection of the competitive process which delivers lower prices, greater choice and better service and thereby enhances the welfare of Australians, consistent with the objective in s 2 of the Competition and Consumer Act 2010. The Immunity Project is not purporting to test the effectiveness of the AIPCC in delivering these broader benefits, at least not directly.
[79] A person seeking a marker need only provide the ACCC with sufficient information to allow the ACCC to determine whether or not any other person has obtained a marker or applied for immunity in respect of the cartel and the ACCC has not received legal advice that it has sufficient evidence to commence proceedings in respect of the cartel: ACCC, ACCC immunity policy interpretation guidelines, July 2009, [41]. Generally speaking marker requests involve identifying the general nature of the conduct involved (eg price fixing, bid rigging), the industry and possibly the geographic area/s affected.
[80] ACCC, ACCC immunity policy interpretation guidelines, July 2009, [53].
[81] If the size of penalties imposed over the past three decades are any guide, then it could be suggested that the cartels discovered to date falls on the minor end of the scale. See the penalty averages set out in C Beaton-Wells and B Fisse, Australian Cartel Regulation: Law, Policy and Practice in an International Context (2011, CUP), p429 (corporate penalties), p462 (individual penalties).
[82] This is what evidently occurred in the Visy case, referred to above. In the submissions as to penalty, jointly recommended by the parties, in relation to contract customers, the ACCC stated expressly that it did not allege that the cartel ‘had any negative financial impact or caused loss to’ such customers — a non-allegation plainly won by Visy in its settlement negotiations with the ACCC in order to minimise exposure in private damages actions: see Australian Competition and Consumer Commission v Pratt [No 3] [2009] FCA 407; (2009) 175 FCR 558, 578 [29], 583 [35] (Ryan J).
[83] See Part IIIA.
[84] ACCC, ACCC immunity policy for cartel conduct, July 2009, [8](a)(v), [17](a)(v).
[85] It is difficult to know exactly how many of these proceedings followed an immunity application given that judgments do not routinely indicate when this is the case and the ACCC does not report on such matters (see further Part VI below). It is also possible that there was more than one grant of immunity in respect of a single cartel, depending on how the cartel was defined for the purposes of the immunity/
[86] ACCC, ACCC immunity policy for cartel conduct, July 2009, [11].
[87] See Part IIIB above.
[88] Cf statements by the ACCC Chairman indicating an intended change in this approach: R Sims, ‘ACCC – Future Directions’ (Speech delivered at the Law Council of Australia Competition and Consumer Workshop, Gold Coast, 27 August 2011) 4–5; R Sims, ‘Some Compliance and Enforcement Issues’ (Speech delivered at the Law Institute of Victoria Breakfast, Melbourne, 25 October 2011) 2–3; R Sims, ‘Some Perspectives on Competition and Regulation’ (Speech delivered at the Melbourne Press Club, 10 October 2011) 3–4.
[89] One practitioner attributed this to past high profile losses in cartel cases: ‘I definitely think they’ve been spooked by those petrol cases..’.
[90] For background on the case, see C Beaton-Wells, 'The Billionaire, Prime Minister and Chairman: ACCC v Visy Ltd' in B Rodger (ed), Landmark Cases in Competition Law, Kluwer International (Law), 2012, ch 1, pp27-45.
[91] In the case against the Indonesian airline for example, there have been almost three years of interlocutory disputes: see ACCC v P. T. Garuda Indonesia (No 9) [2013] FCA 323; ACCC v PT Garuda Indonesia Ltd (No 2) [2012] FCA 1429 (14 December 2012) ACCC v PT Garuda Indonesia Ltd [2010] FCA 551 (2 June 2010); ACCC v P T Garuda Indonesia Ltd (No 3) [2012] FCA 1481 (21 December 2012); ACCC v P T Garuda Indonesia Ltd (No 8) [2013] FCA 172 (25 February 2013).
[92] K Edghill, ‘Is the UK Cartel Offence Dead or is there a Problem with Immunity: The role of immunity as a prosecutorial tool in criminal cartel offences in the United Kingdom and Australia’, Article at UNISA Competition Law Workshop, 2011.
[93] See the discussion in A Stephan, ‘‘How Dishonesty Killed the Cartel Offence’ [2011] Crim LR 446.
[94] See generally Parker, C. and Nielsen, V. (eds), 2011, Explaining Compliance: Business Responses to Regulation, Edward Elgar, Cheltenham UK.
[95] For further information about the research methodology and results, see the reports generated by the Cartel Project available at http://www.law.unimelb.edu.au/cartel/project-news/project-outputs. For a summary see C Beaton-Wells and C Parker, 'Justifying criminal sanctions for cartel conduct: A hard case' Journal of Antitrust Enforcement (2012), pp1-22 doi:10.1093/jaenfo/jns009
[96] See at http://transition.accc.gov.au/content/index.phtml/itemId/1076067. The ACCC has also taken actions in specific industries to raise awareness of the AIPCC. For example, in 2012 it wrote to 2,500 executives in the heavy construction and construction supply industries - providing a reminder about the potential sanctions for cartel conduct, and providing the name of someone they can contact if they want to report their involvement in a cartel and apply for immunity. See R Sims, ‘ACCC Priorities in Enforcing Competition Law’, Article at Competition Law Conference, 5 May 2012, Sydney.
[97] See C Parker and C Platania-Phung, The Deterrent Impact of Cartel Criminalisation: Supplementary Report on a Survey of Australian Public Opinion Regarding Business People's Views on Anti-Cartel Laws and Enforcement, (12 January 2012) and the discussion and analysis in C Parker, ‘Economic rationalities of governance and ambiguity in the criminalization of cartels’ (2012) 52 (5) British Journal Of Criminology 974; C Parker, ‘The war on cartels and the social meaning of deterrence’ (2013) 7 Regulation & Governance 174.
[98] ACCC, Compliance and Enforcement Policy 2013.
[99] In addition to stopping the conduct in question, encouraging the use of compliance systems, and punishing wrongdoers, all of which are also identified as aims in the ACCC’s Compliance and Enforcement Policy 2013.
[100] See the discussion in C Beaton-Wells and K Tomasic, 'Private Enforcement of Competition Law: Time for an Australian Debate' (2012) 35(3) UNSW Law Journal 650. Outside of the Australian context, see A P Komninos, ‘Relationship between Public and Private Enforcement: Quod Dei Deo, Quod Caesaris Caesari’ (Paper presented at 16th Annual EU Competition Law and Policy Workshop, Florence, 23 June 2011) <http://ssrn.com/abstract=1870723> W P J Wils, ‘The Relationship between Public Antitrust Enforcement and Private Actions for Damages’ (2009) 32 World Competition: Law & Economics Review 3; W P J Wils, ‘Should Private Antitrust Enforcement Be Encouraged in Europe?’ (2003) 26 World Competition: Law & Economics Review 3; C Hodges, ‘European Competition Enforcement Policy: Integrating Restitution and Behaviour Control’ (2011) 34 World Competition: Law & Economics Review 383.
[101] The literature on the topic is voluminous.
[102] Maintaining the confidentiality of the information provided by immunity applicants is generally recognised as a key attribute of an effective immunity policy: see International Competition Network, Anti-Cartel Enforcement Manual, Cartel Working Group Subgroup 2: Enforcement Techniques, May 2009, ch2, p8 [3.4] . In particular, exposure to or strengthening of follow-on damages claims based on information provided to a regulator is said to be a genuine concern for and a potential disincentive to immunity applicants – if not in making the application in the first instance then in doing so in a full and frank manner, notwithstanding the potential for revocation of immunity should the applicant be considered to have failed in its disclosure obligations. Such considerations underpin both the so-called ‘paperless process’ relevant to immunity applications and the provisions for confidentiality, subject to the applicant’s consent or the operation of normal legal processes, that are common features of immunity policies around the world. See International Competition Network, Anti-Cartel Enforcement Manual, Cartel Working Group Subgroup 2: Enforcement Techniques, May 2009, ch2, p. 8 [3.4]; P Crampton and G Reynolds QC, Leniency Programmes in Competition Law, January 2006, pp14–15.
[103] The European Commission entered the debate substantively in December 2005 when it released a Green Paper on Damages Actions for Breach of the European Community Antitrust Rules. See European Commission, Green Paper on Damages Actions for Breach of the EC Antitrust Rules (COM(2005) 672 final, 19 December 2005). The paper followed a study which had concluded that this area of law presented a picture of ‘total underdevelopment’ in the Member States. See D Waelbroeck, D Slater and G Even-Shoshan, Study on the Conditions of Claims for Damages in Case of Infringement of EC Competition Rules (Ashurst, 31 August 2004). Following the consultation initiated by the Green Paper, on 3 April 2008, the Commission released a White Paper with detailed proposals for facilitating the establishment of an effective and efficient system of private enforcement of competition law, at both Community and national levels. See European Commission, White Paper on Damages Actions for Breach of the EC Antitrust Rules (COM(2008) 165 final, 3 April 2008). The White Paper’s starting premise is that the right of victims to compensation is guaranteed by EU law and that all persons having suffered loss as a result of infringements are entitled to access effective redress mechanisms so that they can be fully compensated. Thus, the primary objective of the White Paper was identified as being to improve the legal conditions for victims to exercise their right to reparation under the EC Treaty. Providing for the exercise of this right is seen as necessary to ensure the full effectiveness of the EU competition rules. See mostly recently the European Commission’s proposal for a Directive to facilitate damages claims by victims of antitrust violations: European Commission, Recommendation on common principles for injunctive and compensatory collective redress mechanisms in the Member States concerning violations of rights granted under Union Law, C(2013) 3539/3.
[104] It has been estimated that about 90% of US antitrust cases are brought by private litigants and the threat of civil damages exposure in private cases is today generally regarded as an equal if not more powerful deterrent than criminal prosecution in the US. See, eg, R H Lande and J P Davis, ‘Benefits from Private Antitrust Enforcement: An Analysis of Forty Cases’ (2008) 42 University of San Francisco Law Review 879; R H Lande and J P Davis, ‘Comparative Deterrence from Private Enforcement and Criminal Enforcement of the US Antitrust Laws’ (2011) Brigham Young University Law Review 315. Cf the critique in G J. Werden, S Hammond, and B Barnett, ‘Deterrence and Detection of Cartels: Using All The Tools and Sanctions’ (2011) 56 Antitrust Bulletin 207, 227–33 and the response by Lande and Davis in R Lande and J Davis, ‘The Extraordinary Deterrence of Private Antitrust Enforcement: A Reply to Werden, Hammond & Barnett’, 6 August 2012, at http://ssrn.com/abstract=2127762.
[105] The Antitrust Criminal Penalty Enhancement and Reform Act 2004 offers immunity applicants the prospect of a significant reduction in civil liability, conditional upon the applicant providing ‘satisfactory cooperation’ to civil plaintiffs. The reduction takes two forms. First, only single damages will be allowed against the cooperating immunity applicant/defendant. This de-trebling provision is seen as significantly lowering the expected cost of future damages claims. Secondly, the Act limits the federal and state liability of an immunity applicant to the damages attributable to the commerce of the applicant in the goods and services affected by the violation. This provision has the effect of eliminating the doctrine of joint and several liability for an immunity applicant under which, in the context of a cartel prosecution, each corporate cartel member would potentially be liable for the full amount of a plaintiff’s damages, irrespective of the cartel member’s share in the affected commerce.
[106] See, eg, G Samuel, ‘The ACCC Approach to the Detection, Investigation and Prosecution of Cartels’, Paper presented at the Economics Society of Australia Detection of Cartels Symposium, 28 September 2005, p. 21. Cf. G Samuel, ‘The Relationship between Private and Public Enforcement in Deterring Cartels’, Paper presented at International Class Action Conference, 25 October 2007, Sydney, p. 5. The ACCC’s view has received legislative endorsement in the scheme governing ‘protected cartel information’ introduced by amendments to the legislation in 2009 (see ss 157(1A)-157D)). The scheme limits considerably the scope for judicial review of decisions by the ACCC to refuse access to information. By contrast, in other jurisdictions, mechanisms have been introduced or proposed by which private claimants may obtain access to relevant information without undermining the efficacy of the immunity program.
[107] See, eg, the position that it adopted in Cadbury Schweppes Pty Ltd v Amcor Ltd [2008] FCA 88; (2008) 246 ALR 137, as discussed in C Beaton-Wells and B Fisse, Australian Cartel regulation: Law, Policy and Practice in an International Context (CUP, 2011), pp408-410.
[108] ACCC, Cooperation Policy for Enforcement Matters (31 July 2002) 2.
[109] In the Marine Hose case, only one of the four cartel participants (Parker ITR) had provided for a compensation scheme for customers. The judge that approved the jointly recommended penalties, agreed in the settlement with the ACCC, observed that a ‘factor which will require future consideration is whether payment of compensation or making restitution to those adversely affected by the illegal conduct should go in mitigation of the penalty. It may be that a company should receive a lower (or discounted) penalty if it has assisted those affected by its actions by implementing a compensation scheme in the same way that a company may receive a discount for assisting the ACCC’: Australian Competition and Consumer Commission v Bridgestone [2010] FCA 584; (2010) ATPR 42-320, [40]. However, despite identifying the provision of compensation as a relevant factor in the assessment of penalties, Finkelstein J did not specify how this factor had been taken into account in determining the penalties in this case, or indicate whether any distinction had been drawn between the amount payable by the parties based on whether they had provided for compensation schemes. A press release issued by the ACCC identified that the penalties reflected the ‘number of contraventions found against each respondent with some discount for co-operation with the ACCC’, but made no reference to the role of compensation in assessing the appropriate penalties: ACCC, ‘$8 Million Plus Penalty Imposed on Cartel Members’ (Press Release NR 074/10, 14 April 2010).
[110] The ACCC may also use the broader power to bring representative actions under the Federal Court of Australia Act 1976 (Cth).
[111] See, eg, ACCC v Golden Sphere International Inc [1998] FCA 598; (1988) 83 FCR 424; ACCC v Giraffe World Australia Pty Ltd [1998] FCA 819; (1988) 84 FCR 512.
[112] See n 82 above.
[113] See ACCC v Monza Imports Pty Ltd [2001] FCA 1455; (2001) ATPR 41-843, 43 440; ACCC v Apollo Optical (Aust) Pty Ltd [2001] FCA 1456 (17 October 2011) [22]–[26]; ACCC v ABB Transmission and Distribution Ltd (No 2) [2002] FCA 559; (2002) 190 ALR 169, 183–4 [51]; ACCC v Leahy Petroleum Pty Ltd [No 3] [2005] FCA 265; (2005) 215 ALR 301, 323 [116]–[118]; ACCC v Dataline.Net.Au Pty Ltd (2006) 236 ALR 665, 691–2 [106]–[107].
[114] See, eg, D Round, ‘Consumer Protection: At the Merci of the Market for Damages’ (2003) 10 Competition and Consumer Law Journal 231; H Spier, ‘A Mature Trade Practices Act Needs Some Fine Tuning in Core Areas’ (2009) 17 Trade Practices Law Journal 287, 289-293.
[115] ACCC, Leniency Policy for Cartel Conduct (June 2003) Pt A, [2(e)]; Pt B, [2(e)].
[116] ACCC, Review of ACCC’s Leniency Policy for Cartel Conduct, Discussion Paper,24 November 2004, 4, 13.
[117] ACCC, Review of ACCC’s Leniency Policy for Cartel Conduct, Discussion Paper, 24 November 2004, 5.
[118] ACCC, Cooperation Policy for Enforcement Matters 2002, 2.
[119] See, eg, actions relating to the Visy/Amcor cardboard packaging cartel (see Australian Competition and Consumer Commission v Visy Industries Holdings Pty Ltd (Federal Court of Australia Proceeding No VID1650/2005)) and Cadbury Schweppes Pty Ltd v Amcor Ltd [2008] FCA 88; (2008) 246 ALR 137; the air cargo surcharge cartel (De Brett Seafood Pty Ltd v Qantas Airways Ltd (formerly Auskay International Manufacturing & Trade Pty Ltd v Qantas Airways Ltd) (Federal Court of Australia Proceeding No VID12/2007)); and a rubber cartel (Wright Rubber Products Pty Ltd v Bayer AG (Federal Court of Australia Proceeding No VID882/2007)).
[120] See, eg, P Cashman and R Abbs, ‘Problems and Prospects for Victims of Cartels: The Strengths and Limitations of Representative and Class Action Proceedings’ (Article presented at the Competition Law Conference, Sydney, 23 May 2009); B Slade and R Ryan, ‘Representative Proceedings in Competition Law’ (Article presented at the Competition Law Conference, Sydney, 23 May 2009); B Dellavedova and R Gilsenan, ‘Challenges in Cartel Class Actions’ [2009] UNSWLawJl 52; (2009) 32 University of New South Wales Law Journal 1001; Hank Spier, ‘A “Mature” Trade Practices Act Needs Some Fine Tuning in Some Core Areas’ (2009) 17 Trade Practices Law Journal 287; C Beaton-Wells and B Fisse, Australian Cartel Regulation: Law, Policy and Practice in an International Context (CUP, 2011) 405–19 [10.3], 517– 27 [11.5]; Ian Wylie, ‘Cartel Compensation – A Consumer Perspective’ (2011) 39 Australian Business Law Review 177.
[121] For example, removal of the requirement for ministerial consent under s 5(3) of the Competition and Consumer Act 2010 in international cartel cases and an amendment to s 83 to clarify that agreed facts constitute at least prima facie evidence of such facts for the purposes of follow on actions. See the discussion in Part VA(i) above.
[122] ACCC, ACCC Position Paper, Review of ACCC’s Leniency Policy for Cartel Conduct, 26 August 2005, [88].
[123] G Samuel, ‘Current Issues on the ACCC’s Radar’, Article at Competition Law Conference, Sydney, 29 May 2010) 6. Cf. the ACCC figures cited above which suggests there have not been an increase in immunity applications since the introduction of criminal sanctions.
[124] ACCC, ACCC Position Paper, Review of ACCC’s Leniency Policy for Cartel Conduct, 26 August 2005, [87], [97].
[125] A more onerous version of this proposal would involve: (a) including an estimate of the damage caused by the agreed conduct and requiring that the settling respondent put aside that amount for compensation to private claimants, with a distribution model to be developed and implemented by claimants’ representatives subject to court approval; and/or (b) requiring that the settling respondents provide information to claimants’ representatives to enable them to calculate the damage caused, and as per above requiring that amount to be set aside and distributed. See Maurice Blackburn, Position Paper for Melbourne Law School Roundtable on Private Enforcement of Competition Law, 12 November 2010, [5.9].
[126] Consider also the broader considerations as to whether the AIPCC may undermine so-called ‘normative compliance’: C Beaton-Wells, ‘Normative Compliance – The End Game’, CPI Antitrust Chronicle, February 2012(1).
[127] This work is overseen by a Compliance Strategies Branch: see http://foi.accc.gov.au/node/37.
[128] ACCC, Cooperation Policy for Enforcement Matters 2002, 3.
[129] A similar discrepancy applies in the US between the treatment of antitrust violations and other corporate crimes. In that jurisdiction there is no reward for an antitrust violator on account of having a compliance program. Yet outside of the antitrust arena, a compliance program may be (at least in part) a basis for a decision not to charge under the operative DOJ charging discretion memos. See US Department of Justice and US Securities and Exchange Commission, FCPA: A Resource Guide to the US Foreign Corrupt Practices Act (Nov. 14, 2012), http://www.sec.gov/spotlight/fcpa/fcpa-resource-guide.pdf.
[130] Another key principle identified in the Compliance and Enforcement Policy as intended to guide the ACCC’s work is ‘fairness’. Fundamentally, the AIPCC could be seen as unfair in that it rewards an admitted offender without regard to the offender’s culpability or the harmfulness of its conduct. Plainly, immunity policies in general are seen by competition authorities as providing such significant benefits for enforcement as to override any competing interest of fairness. Fairness considerations may be reflected in part in the ineligibility of parties that instigate cartels or coerce or lead others into participation in them. However, in practice, the relevant exemption is not enforced.
[131] ACCC, ACCC Position Paper, Review of ACCC’s Leniency Policy for Cartel Conduct, 26 August 2005, [160].
[132] ACCC, ACCC Position Paper, Review of ACCC’s Leniency Policy for Cartel Conduct, 26 August 2005, [161].
[133] Cf the transparent practices of the European Commission. Its Notice on Immunity from Fines and Reduction of Fines in Cartel Cases [2006] OJ C 298/17, 8 December 2006, [39] sets out that:
[i]n line with the Commission's practice, the fact that an undertaking cooperated with the Commission during its administrative procedure will be indicated in any decision, so as to explain the reason for the immunity or reduction of the fine.
Press releases by the Directorate General after the conclusion of proceedings contain details about both the fine that would have been imposed on immunity applicants but for the immunity, as well as any leniency, or 'procedural discounts' that were actually applied. See eg European Commission Directorate General Competition Press Release, Antitrust-Commission fines producers of TV and computer monitor tubes € 1.47 billion for two decade-long cartels, IP/12/1317 (05 December 2012) <http://europa.eu/rapid/press-release_IP-12-1317_en.htm> (attached as PDF-EUPressReleaseCathodeRayCartelFines); European Commission Directorate General Competition Press Release, Antitrust-Commission fines producers of water management products € 13 million in 6th cartel settlement, IP/12/704 (27 June 2012) <http://europa.eu/rapid/press-release_IP-12-704_en.htm> (attached as PDF- EUPressReleaseWaterProductCartelFines). Notably the press releases also include a statement alerting persons affected by the behaviour that is the subject of the release to their rights to seek damages and confirm that in cases before national courts, a Commission decision is binding proof that the behaviour took place and was illegal. ACCC press releases make no reference to private rights and compare also the more uncertain position under s 83 of the Competition and Consumer Act 2010 regarding the evidentiary status of findings of fact made in Commission proceedings, particularly where the proceedings are settled (see Part VA(i) above).
[134] See, eg, ACCC, Annual Report 2010-2011, p29; ACCC Annual Report 20009-2010, p39; ACCC Annual Report 2008-2009, p27; ACCC Annual Report 2006-2007, p48; ACCC Annual Report 2005-2006, p43.
[135] The one exception to this is in the ACCC’s Annual Report 2007-2008 where it is stated that the Commission had ‘concluded four cases that had been instituted following the granting of immunity’ (p45).
[136] ACCC, ‘Proceedings instituted against Visy group, senior executives for alleged cartel in the corrugated fibreboard container market’, MR 327/05, 21 December 2005.
[137] See ACCC v Visy Industries Holdings Pty Ltd [2007] FCA 1617, [8]-[12], [38].
[138] See, eg, the reviews cited in n 16 above.
[139] By the time that proceedings are concluded, the identity of the immunity applicant is likely to deducible in any event from the fact that it is the one party to the cartel against which proceedings have not been brought.
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