Chris Hayes (Werriwa, Australian Labor Party) Share this | Hansard source

Cartel operations certainly undermine the market and they are certainly detrimental to consumers. Consumers suffer, small business suffers and the community as a whole suffers as a consequence of cartel behaviour. Cartel behaviour is where organisations will group together by agreement with a view to determining pricing, and that pricing could be input pricing or sale pricing—in other words, cartels will operate to exclude proper competition. One thing I would have thought had been reasonably consistent on both sides of the House is the view that supports and promotes competition as the basis for delivering the best results for consumers, the people in our electorates who we all represent. Manipulating prices and manipulating what the customers can receive or restricting supply—in other words, rigging the market—can only operate to the absolute detriment of the people who we represent and the market itself. It is for that reason that in the lead-up to the last election Labor was very firm in ramping up its position on the Trade Practices Act to address the issue of cartel behaviour, with a view to imposing jail sentences for those who were found to be guilty of such behaviour, because cartel behaviour is a scourge on our society; it is and should be regarded as a criminal offence.

The Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2008 makes it a criminal offence for corporations to make a contract arrangement or understanding that will contain provisions on fixed prices, restrict imports or divide or restrict the actual interplay of the market itself. The bill includes a maximum 10-year jail term for offences and also amends the Telecommunications (Interception and Access) Act 1979 to enable telecommunication interception powers to be used in addition to other available tools to investigate breaches of cartel offences.

As I said earlier, the reason for operation of cartels is to undermine the free flow of our market economy, and as a consequence it should be at the forefront of the mind of every member of this place that we must get this particular position right if we are truly to represent the free market economy for this country. Cartels have occurred in the past, and the previous speaker in this debate gave a number of examples of that. He went on to give a number of examples of cartel-like behaviour that occurs internationally. Unrestricted I am absolutely confident that cartel behaviour will once again emerge if there is a profit to be made. The whole basis of cartel behaviour in the first place is to extract a greater profit for those who actually participate in the cartel arrangement.

In Australia you can go to jail for relatively minor stealing offences. I do not say that in any way to demean our criminal justice system, but, having regard to what I suppose is relatively minor, we can compare that to the situation at the moment where people can actually be the beneficiaries of stealing or accumulating millions upon millions of dollars from consumers. At the moment such people face fines and face corporate action but do not face the harsh realities of our criminal justice system and, as a consequence, avoid jail sentences. This bill goes a long way towards addressing that.

After lengthy consultations with the community and experts in the field, the final draft legislation provides a term of up to 10 years in jail for such cartel behaviour. That means, by the way, that it is now up there with some of the toughest provisions in the world. A maximum 10-year jail term brings this into line with provisions in the United States and the current jail terms for other corporate crimes as well. This legislation needs to be tough. It needs to send a message in the clearest possible terms that you had better think twice about being involved in cartel behaviour and ripping off Australians, because we are committed to doing something about it. We are committed to actually punishing those who are found to have participated in these actions with what would be regarded by consumers as the appropriate penalty.

We are here in this parliament representing those very consumers. We want to protect those people who are the victims of cartel behaviour. That is why in the lead-up to the 2007 election Labor committed to implementing the Dawson review recommendations, and that is specifically to introduce jail terms for serious cartel behaviour. Not that we wish to be political about this, Mr Deputy Speaker, but I think it is a matter of record that the former Treasurer and member for Higgins had once committed to introducing this important reform into the Trade Practices Act but somewhere in his period of office as Treasurer it seemed to be overlooked. For all the time of the Howard government—despite its having a position which I understood was a mandate but maybe not, and despite having a commitment to introduce jail sentences for serious cartel behaviour—that never ever eventuated. On the other hand, throughout that whole period members opposite will recall that, in debate after debate in this place on the Trade Practices Act, and particularly with reference to the Dawson inquiry, the Labor Party has always had a strong and supportive position on any legislation that would criminalise cartel behaviour.

Back in 2003 the Dawson committee review into the operations of the Trade Practices Act recommended the introduction of jail terms for serious cartel conduct. It was one of a few recommendations that was actually made arising out of that review. As I said, the previous government sat on its hands while the rest of the world updated their laws in relation to the fight against anticompetitive behaviour. Other countries across the globe have already instituted such measures. The United States, the United Kingdom, Norway, France, Germany, Israel, Taiwan and Canada have already instituted jail terms for serious cartel conduct, and it is about time the opposition supported this policy. As I understood it, it was at one stage the policy of the former government but it never came to fruition. So we welcome their support on this occasion.

The OECD on 25 March 1998 instituted an anticartel program with the adoption of the recommendations of the council concerning effective action against hardcore cartels. The OECD defined hardcore cartel conduct as anticompetitive agreements, anticompetitive concerted practice, anticompetitive arrangements by competitors to fix prices, to make rigged bids, to establish input restrictions or quotas or share or divide markets by allocating customers, suppliers, territories or lines of commerce. The OECD condemned hardcore cartel behaviour as a most egregious violation of competition law and called on all OECD members to ensure that their laws adequately prohibited such cartels and that they provide for effective sanctions, enforcement procedures and investigative tools with which to combat them.

The government has decided to increase the maximum penalties for cartel behaviour to 10 years to send a very clear message to those who may participate or seek to participate in cartel conduct. The maximum penalties for the offences are for individuals a maximum term of imprisonment of 10 years and/or a maximum fine of $220,000. For corporations it is a fine that is greater than $10 million or three times the value of the benefit from the cartel or, where the value cannot be determined, 10 per cent of the annual turnover. This government gave extensive consideration to the jail term. As members will recall, in the draft exposure bill released last year five years was being recommended. However, through consultation I think reflecting what the community view is with respect to cartel or cartel-like behaviour, the decision was made to increase that to a 10-year term as it better reflects the seriousness of the crime. In addition to that, it brings it in line with and makes it more consistent with other criminal law related to corporate related offences. A maximum 10-year prison sentence already exists for directors who wilfully defraud or deceive a body corporate, or for directors who fraudulently appropriate the property of a body corporate. The proposed 10-year jail term will also put Australia on par with the United States in having the world’s toughest provisions in respect of cartel behaviour.

There is a second aspect of this relating to the civil penalties that apply. They will move to a maximum of $500,000 for individuals and a penalty consistent with the maximum criminal fine for corporations. The Australian Competition and Consumer Commission will investigate all matters and be responsible as the law enforcement body, if you like, to investigate cartel-like behaviour in conjunction with other appropriate law enforcement bodies. They will actually run the brief of investigation. The Commonwealth Director of Public Prosecutions will be responsible for determining and physically making the prosecution of such behaviour.

That brings me to another aspect of this bill: the tools of investigation. Determining cartel arrangements is always going to be difficult. Cartels are normally a secretive exercise at best. They are not something where people advertise what they do, regardless of the fact that they might be wearing pinstriped suits. They are organised relatively covertly because of their need to avoid detection.

One of the biggest tools that we have at present for detecting serious and organised crime is telephone interception powers. Telephone interception provisions have been used by all states and territories and, as a consequence of a bill that passed this House last week, the Queensland police are now also able to access telephone interception powers in respect of serious and organised crime. As I say, the use of telecommunication interception powers is one of the most significant developments in law enforcement investigations.

Accordingly, this bill makes an amendment to the Telecommunications (Interception and Access) Act 1979 to enable the ACCC to seek to use intercepted material in relation to cartel investigations. That does not give the ACCC the power to initiate telecommunication interception, whether of telephone, email or SMS. It allows them to receive evidence that may develop from investigations of the Australian Crime Commission, the Australian Federal Police or other agencies that have access to that act, and to use that material in formulating the brief of evidence for making a prosecution under this act. That is certainly a significant development, and it shows not only that this government is clear in its position on and condemnation of cartel-like behaviour but that we are giving those agencies responsible for detecting such behaviour all the necessary tools to detect, investigate and prosecute those responsible.

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