Competition & Trade Practices
3. Cartel Conduct
Authors: Staff Legal Eagle
Firm / Chambers:
Last updated: 11 Jul 2015
- The Competition and Consumer Act 2010 (Cth) contains civil prohibitions as well as making it a criminal offence for individuals and businesses to be involved in cartels.
- A cartel occurs where businesses act together instead of competing with each other in order to increase the profits of cartel members. Cartels can be formed locally, nationally or internationally. Activities commonly engaged in by cartels include:
- price fixing where competitors agree on what prices they will charge instead of competing with each other;
- market sharing where competitors divide the geographical market or the local customers among themselves and only conduct business in their share of the market to reduce competition;
- bid rigging where competitors agree among themselves who will get the tender and at what price before making their bids; and
- output restrictions where competitors agree to control the supply of goods and services in order to drive prices up.
- Individuals participating in a cartel can face criminal and civil penalties which include:
- up to 10 years in prison and fines of up to $340,000 per criminal offence; or
- a civil penalty of up to $500,000.
- Companies found guilty of cartel conduct will face a maximum fine or penalty that is the greater of:
- $10 million; or
- three times the total value of the benefits obtained that are reasonably linked to the offence or breach; or
- if the value of the benefits cannot be properly assessed then the penalty is 10% of the annual turnover of the company (including its related corporate bodies) in the previous 12 months.
- Additional penalties and orders can also include:
- Injunctions;
- an order disqualifying someone from managing a company; and
- community service orders.
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