Bernie Ripoll (Oxley, Australian Labor Party) Share this | Hansard source

I rise today to speak on the Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2008. There is no doubt that everybody in this place would be opposed to the formation of cartels and would be supportive of government action, regulation and laws to prevent cartels from not only forming and operating but also, at their most criminal level, robbing people of their income. So I do not think it would be of surprise in this place that there would be broad support not only in the parliament but also in the community for action to take place in terms of cartel conduct and that that action should form the basis of having not only decent regulation and laws that provide for the abolition of such practices but also pecuniary penalties—and I would suggest that they be very serious penalties.

Often the message that needs to be sent to those who might want to rob people, to rip people off, to do the wrong things, to be anticompetitive, to set up cartels and to engage in other forms of anticompetitive behaviour is that they should understand that, if they do practise those behaviours, the penalties will be very serious—that there are pecuniary penalties and they face long jail terms. I think it is a fair and appropriate way to deal with white-collar crime and what is criminal behaviour from a range of people, regardless of their position or status in life or in the company within which they operate.

I note the previous speaker’s concern as to who you would take on. The member for Fadden, the previous speaker, asked whether you take on the lot—core staff, individual staff, CFOs, company directors, chief executive officers, managing directors and so forth. I do not know that that, in itself, is so much an issue. I think who you take on is quite simple. It is those people who actually made the decisions and took on that behaviour—the ones who created the circumstance. So it is the decision makers. They are the people you take on. And they are the people you send the message to, to ensure that cartel type behaviour does not go on.

I think it is also fair to say that cartels are an undesirable element of society across a whole range of activities and areas. At the worst level there are drug organisations and there is money laundering, criminal behaviour and people trafficking—all of the uglier sides of humanity where cartels operate. They also operate in a range of less insidious areas such as simple anticompetitive behaviour, whether or not in the fuel retailing sector. I am sure there are many different views in terms of how that operates. There have been investigations in the past by the ACCC and others and certainly by the community, which is concerned about the rigging of prices—petrol prices or the price of anything else—and there are other forms and other types of cartels. A cartel really is any type of anticompetitive arrangement between two or more businesses to fix prices, reduce competition, rig bids with collusive tendering, establish output restrictions or quotas, or basically manipulate markets to their advantage in an uncompetitive manner in order to receive some sort of advantage by dividing up markets and customers and doing a range of other things.

Not all of those practices are anticompetitive or collusive necessarily. There are arrangements in place which mean that sometimes some of those behaviours are not necessarily in the form of a cartel. It is good, though, that, after many years, particularly in the past decade, and after a lot of words, investigations, reports and discussions with previous holders of office in this place about what to do, at least some movement is forthcoming. There is some movement forward and the Rudd government will take on some of this difficult terrain and put in place legislation to deal with that. It can be done in a range of ways, and that is what this bill is about. I do not see this bill as some sort of closing off of the loops, which would forever prevent cartels from operating and would prevent anticompetitive behaviour, but I see it as a step forward, as a signal to business and industry, as well as to consumers, to understand that in the end we are on their side. We want to make sure that people pay fair prices and that there is fair competition as much as is possible to level out the playing fields, whether in retail—fuel or food retailing, or any other type of retailing—service provision or whatever the case might be.

That is why this Rudd Labor government is committed to criminalising this anticompetitive cartel type behaviour. It is understandable that in Australia you can go to jail for stealing relatively minor amounts of money, but you will not go to jail if you are a company executive who colludes with a competitor, setting artificial prices or locking out a competitor—maybe forcing them to go out of business and costing them money and jobs—and artificially setting high prices and basically stealing millions of dollars from ordinary Australian consumers. This is not just. There ought to be a way to deal with company executives who make very conscious decisions about their behaviour without considering what that behaviour will cause and create or who it will hurt and who it will impact on.

After lengthy consultations with the community and with a range of experts in the field, this legislation provides for jail terms of up to 10 years for such cartel behaviour and conduct as I described before. In global terms, that means that this bill puts Australia in line with some of the toughest regimes in the world when dealing with cartels. Up to 10 years is a significant penalty that I believe will go some way to being a very strong guide and indicator, to officers of companies and people who might assist others in cartel type behaviour, that this really is not on, that it is not acceptable, that it does attract penalty, that it is something that the Commonwealth and its agencies are focused on and that there are tough penalties if you get caught. The maximum 10-year jail terms will bring us in line with the United States’ current jail terms for corporate crimes of a similar nature.

This legislation needs to be tough. It needs to send the clearest message possible that, if individuals are involved in an international cartel ripping off Australians, if they are involved in a locally based cartel arrangement or if they are involved in any of this type of conduct or behaviour, there is a serious penalty for that behaviour. Sadly, I have to say that, coming to government in the past 12 months, we find ourselves having to deal with so many areas of policy where the previous government failed to act. It was not a failure of knowledge or a lack of demand from the community, from ordinary Australians, from experts or from reports; it was just a failure to act. While we heard the rhetoric about the importance of small business, the importance of being supportive of doing all we could for small business and all the rest of it, in real terms what we found was just a failure to act. That in itself is a crime. It is a crime to just sit back and allow businesses to fail, because this is what we are talking about in the end.

Anticompetitive behaviour—the locking out of small businesses, the driving of prices and business to the point where you drive one of your competitors out of business by cartel type behaviour—is a crime, and we in this place should always be conscious to do everything we can about it. We need to take some form of action, whether or not we get it right every single time and whether or not what we do fixes the problem immediately. We need to be more than just words. This bill moves in that direction. The people who stand to be hurt the most, those who are the losers if we do not act, are the Australian public—the consumers, the small businesses, the medium enterprises, those people out there who have staked their life savings on establishing a business and who are then driven out by some cartel behaviour from a larger competitor, those who find themselves with no avenue of redress and those who find themselves with no regulatory framework to assist them. The amendments and changes in this bill will provide people with those mechanisms.

Back in 2003, to be specific, the Dawson committee review into the operation of the Trade Practices Act recommended the introduction of jail terms for serious cartel conduct. It was a good recommendation—it was also a good report. It made that recommendation for good reason: it is a necessary step and is something that must be in place. This was one of the few recommendations for change to arise out of that review, but it was a very, very important one.

While the previous government sat on their hands, we are certainly willing to take on the fight against anticompetitive behaviours, against cartels, and we are willing to send a signal to the community that we are on the side of consumers and that there ought to be a fair and proper playing field. The absence of criminal sanctions for cartel behaviour was most notable in the Visy case, which related to price fixing. The cartel came to light following a request from Amcor to the Australian Competition and Consumer Commission for immunity from prosecution. Following the disclosure of the existence of the cartel, the ACCC brought an action in the Federal Court alleging that, between January 2000 and October 2004, certain officers of companies in the Visy group engaged in price fixing and market sharing with companies in the Amcor group, which was contrary to section 45 of the Trade Practices Act. On 2 November 2007 the Federal Court found that Visy, a listed Australian manufacturer of packaging, had committed 69 contraventions of the Trade Practices Act. In his judgment, Justice Heerey was critical of the cartel. He said:

Had it not been accidentally exposed, it would probably still be flourishing. It was run from the highest level in Visy … It was carefully and deliberately concealed. It was operated by men who were fully aware of its seriously unlawful nature.

I will add to that by saying that, while I have mentioned Visy here, it is certainly not the only company that has been either involved in or investigated with regard to cartel type behaviour. There are companies and organisations that feel they can operate in this manner with impunity. In terms of their actions and the way they structure their business, they feel that somehow they are not part of moral, ethical, legal or other systems that mean they should not help themselves to the till, as it were. This legislation sends them a clear signal that we do not agree, that it is not lawful and that, beyond it not being lawful, it actually attracts some huge penalties, including jail. The court fined the Visy group of companies $36 million, including separate pecuniary penalties for the former chief executive and the former general manager. It is quite a serious penalty. As I have said, this bill will go further towards making it clear that there are very serious penalties now in place to prevent that type of behaviour.

The United States, the United Kingdom, Norway, France, Germany, Israel, Taiwan and Canada already have jail terms in place for serious cartel conduct, although that does not mean they actually prevent it. One of the great tragedies is that they do not necessarily prevent it. But in a law-abiding country, where we believe in the rule of law, we must all take responsibility and do the right thing. If we do not, sometimes there are small penalties and sometimes there are very large penalties. In the case of what we are doing here, there will be very large penalties. That is the clear message of this legislation. The message I want to get out in the few words I have to say on this is that basically companies will not be able to buy their way out of behaviour they have operated in line with for some time. Certain companies need to understand that there will be a much more serious penalty than a monetary penalty—that is, going to jail and losing your freedom—so I am very supportive of this bill.

I also want to commend the minister, the Hon. Chris Bowen, Assistant Treasurer and Minister for Competition Policy and Consumer Affairs, for taking on this area. It is probably an undesirable area to take on, in some ways. It is a tough area in which to try to ensure that the right thing happens—to make sure you provide the right regulatory framework and that at the same time you do not create an anticompetitive marketplace by bringing in rules designed specifically to prevent it in the first place. I think we are conscious of that, and we are conscious of criticism that may appear. Certainly I am conscious of some of the nuances in trying to deal with very complex issues and often structures and arrangements that are easily concealed, which people may instinctively understand and know exist but would find it almost impossible to prove in a court of law or at some reasonable level.

It is tough for us, as legislators, to strike a balance between a strong regulatory framework, penalties and making sure we prevent anticompetitive behaviour—behaviour involving robbing people for monetary gain—and creating a robust, fair and competitive environment where companies feel free to make arrangements to compete fairly and hard in terms of being the best in the sector, the best in the market or whatever they want to achieve. That includes the fluctuation of prices, being able to compete on prices and being able to set lower prices and drive competitors down. So you need to strike a balance. I am very conscious in my mind of the necessary requirements to get it right.

I understand that in this place the pendulum swings. Sometimes it swings a little bit too much either way, and it is very hard to get it spot-on in the middle. But I am confident that what we have done here today with this bill will get the pendulum very close to a position of sending strong messages about strong penalties without, at the same time, creating an environment which in itself would exacerbate any problems that currently exist or creating loopholes and regulatory advantage for others who might see some sort of advantage in the new legislation. I think that we have got the balance right, that we are on the right track and that we have sent the right signals. I applaud the minister responsible for his efforts in this area.

On a more local level, I have been an advocate of consumer rights for some time—as probably every member in this House is in some capacity. On a day-to-day basis, we deal with ordinary Australians who come to us for help. They come to us for help when laws or regulations have failed them, when business has failed them or where people who have a lot more power than them have failed them. When they come to us for help, it is frustrating—and I know I share this frustration with many in this place—that we do not have the mechanisms available to us to assist those people and get them proper redress.

Often, when people come to us with a problem—whether it is anticompetitive behaviour, whether they are a small business or an individual—they have been ripped off or robbed in some way. You know they are right. They can prove they are right. You know the company did the wrong thing, you know what the company did is completely unethical, immoral and wrong, or you know they have breached some regulation or code, but there just is not any capacity to whack them. And that is what you want to do. In the end, you want to be able to say to these people, ‘Well, you got away with it for long enough; you’re not going to get away with it anymore.’ To me, it does not matter which sector that is in—whether it is in fuel retailing or food retailing—or what the business might be. If you feel you have a cartel type capacity and the right and if you go down these paths, we will come after you. We will come after you with a very, very big stick. And that is 10 years in jail—some serious penalties—for individuals and organisations alike. I think the message ought to be clear and loud. This bill gives that message and I support it completely.

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