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Landmark $25 million penalty handed down for cartel conduct

16 August 2017
patrick smith
Read Time 4 mins reading time

The Federal Court recently handed down the second-highest fine imposed in ACCC history, ordering Japanese shipping company, Nippon Yusen Kabushiki Kaisha (NYK), to pay $25 million after finding it guilty of criminal cartel conduct.

This represents a landmark decision for the ACCC, as it is its first successful prosecution under the criminal cartel provisions of the Competition and Consumer Act 2010 (Cth).

The Federal Court found that NYK had an arrangement with other shipping lines between 2009 and 2012 that affected vehicle imports into Australia on behalf of major car manufacturers including Nissan, Suzuki, Honda, Toyota and Mazda.

The conduct related to the fixing of freight rates for shipping routes to Australia, as well as the allocation of customers (motor vehicle manufacturers) between members of the cartel. Significantly, the court found that the anti-competitive effect of the offending conduct likely resulted in higher freight rates on the relevant shipping routes to Australia. The ACCC contended that these higher freight rates were likely passed through to Australian consumers in the form of higher prices for imported cars and trucks.

Interestingly, the court found that NYK had actually been operating in the cartel since 1997, but as Australian law only criminalised cartel conduct from 2009, the charges against NYK only related to the importation of cars between 2009 and 2012.

There are a number of key takeaways from this landmark decision:

  1. Through its work with the Commonwealth Department of Public Prosecutions, the ACCC is well resourced and is willing to criminally enforce cartel conduct;
  2. Multinational corporations should be aware that anti-competitive conduct connected to Australia will not be tolerated and can attract significant penalties; and
  3. The level of co-operation and general conduct after an organisation discovers it is under investigation for anti-competitive conduct is an important consideration for the Court when determining the applicable penalty. In this case, NYK was given a global discount of 50% for its early guilty plea. NYK also demonstrated that it had implemented a number of structures, systems and programs to prevent any re-offending.

The ACCC’s investigation into the other alleged cartel participants is ongoing.

For more information on cartel conduct, please contact us.

This article was written by Patrick Smith, Lawyer – Commercial.

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Landmark $25 million penalty handed down for cartel conduct

16 August 2017
patrick smith

The Federal Court recently handed down the second-highest fine imposed in ACCC history, ordering Japanese shipping company, Nippon Yusen Kabushiki Kaisha (NYK), to pay $25 million after finding it guilty of criminal cartel conduct.

This represents a landmark decision for the ACCC, as it is its first successful prosecution under the criminal cartel provisions of the Competition and Consumer Act 2010 (Cth).

The Federal Court found that NYK had an arrangement with other shipping lines between 2009 and 2012 that affected vehicle imports into Australia on behalf of major car manufacturers including Nissan, Suzuki, Honda, Toyota and Mazda.

The conduct related to the fixing of freight rates for shipping routes to Australia, as well as the allocation of customers (motor vehicle manufacturers) between members of the cartel. Significantly, the court found that the anti-competitive effect of the offending conduct likely resulted in higher freight rates on the relevant shipping routes to Australia. The ACCC contended that these higher freight rates were likely passed through to Australian consumers in the form of higher prices for imported cars and trucks.

Interestingly, the court found that NYK had actually been operating in the cartel since 1997, but as Australian law only criminalised cartel conduct from 2009, the charges against NYK only related to the importation of cars between 2009 and 2012.

There are a number of key takeaways from this landmark decision:

  1. Through its work with the Commonwealth Department of Public Prosecutions, the ACCC is well resourced and is willing to criminally enforce cartel conduct;
  2. Multinational corporations should be aware that anti-competitive conduct connected to Australia will not be tolerated and can attract significant penalties; and
  3. The level of co-operation and general conduct after an organisation discovers it is under investigation for anti-competitive conduct is an important consideration for the Court when determining the applicable penalty. In this case, NYK was given a global discount of 50% for its early guilty plea. NYK also demonstrated that it had implemented a number of structures, systems and programs to prevent any re-offending.

The ACCC’s investigation into the other alleged cartel participants is ongoing.

For more information on cartel conduct, please contact us.

This article was written by Patrick Smith, Lawyer – Commercial.