Dana Wortley (SA, Australian Labor Party) Share this | Hansard source

I rise to make a contribution to the debate on the Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2008. This bill delivers on the Prime Minister’s election commitment to the protection of Australian consumers and it represents a long overdue and very specific legislative response to the criminal complexion of cartel behaviours. There are two types of cartel behaviour. A cartel may be broadly defined as an anticompetitive arrangement between two or more businesses. Such arrangements have the purpose, effect or likely effect of substantially lessening competition. Alternatively, the arrangement is identified as anticompetitive by way of an exclusionary provision or provisions. These are provisions in an agreement that prevent, restrict or limit the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of person by any of the parties to the arrangement where those parties are potential competitors or actual competitors.

We have all become familiar with anticompetitive arrangements, particularly price-fixing, in recent years due to their exposure and discussion in the media, and I welcome the shining of the light of scrutiny on such secretive and dishonest dealings. Such agreements are to the detriment of all businesses and all consumers. There are of course gradations in cartel conduct. In 1998 the OECD adopted the definition of hardcore cartel conduct as:

An anti-competitive agreement, anti-competitive concerted practice or anti-competitive arrangement by competitors to fix prices, make rigged bids or collusive tenders, establish output restrictions or quotas or share and divide markets by allocating customers, suppliers, territories or lines of commerce.

This definition still applies within the OECD and it is hardcore cartel conduct—we call it serious cartel conduct—that we are here to discuss today in the context of the Trade Practices Act.

The Trade Practices Act was introduced, I am proud to say, by the Whitlam government in 1974. Its intention was then and continues to be the safeguarding and enhancement of Australia’s welfare through the promotion of competition, fair trading and consumer protection. The act encompasses just about all market transactions between suppliers, wholesalers, retailers and consumers and between competitors. It captures anticompetitive conduct, unfair and unconscionable practices, mergers and acquisitions, product safety and labelling, prices, and industry regulation. It remains an outstanding piece of legislation and a tribute to the government that saw its passage through the parliament—that is, and I say it again, the Whitlam Labor government.

After 35 years in operation the act requires amendment to reflect movements and developments in technologies, business practices, markets and economies both locally and globally. The current part IV of the act does not specifically mention the term cartel. It does refer to anticompetitive conduct being conduct which is per se, of itself, regarded as anticompetitive. Such conduct, which includes price-fixing and resale price maintenance, is prohibited because it is so likely to be detrimental to economic welfare. Part IV also prohibits other conduct subject to a competition test. So item 2 of schedule 1 of the bill inserts a new definition, that of cartel provision.

Additionally, part IV in its present form does not incorporate criminal sanctions for cartel conduct. Such a state of affairs is unsatisfactory and cannot continue. Indeed, its remediation is long overdue. It was back in April 2003, more than six years ago, that the Trade Practices Act review committee released its review of competition provisions of the Trade Practices Act. This is often referred to as the Dawson report, as the review committee was chaired by eminent jurist Sir Daryl Dawson. The committee and its chair really did not mince words. They did not resile from their responsibilities. They stated, in accordance with an ACCC recommendation:

… there should be criminal sanctions for serious cartel behaviour. … a satisfactory definition of serious cartel behaviour needs to be developed and there needs to be a workable method of combining a clear and certain leniency policy with a criminal regime.

Despite a reasonable amount of sound and fury, the former government’s response to the Dawson report essentially signified nothing. No legislative action was taken. Why this is so is open to speculation, but perhaps I will leave that to others. However, it has been left up to Labor to do the decent thing, and that is what we intend to do.

The purpose of establishing criminal penalties for dishonest collusive conduct of the types I have outlined is threefold. The first is to provide an effective deterrent to engaging in the conduct—a deterrent of more immediate personal effect than the civil remedies now available. As the then Assistant Treasurer recently remarked in the other place:

The … bill includes a maximum 10-year jail term for individuals who partake in cartel conduct. The possibility of criminal sanctions for company executives will increase the deterrent effect for businesses that may otherwise rationalise corporate fines for cartel conduct as the cost of doing such business.

After all, it is difficult to estimate a dollar value for the loss of liberty and the shame that accompanies a criminal conviction and a jail sentence. As the highly respected Professor Allan Fels said, ‘The law must not be blind to the colour of the collar.’ The second purpose of criminal penalties in this context is to make sure that there is fairness and consistency with other types of corporate and economic crime that also attract criminal sanctions—for example, tax evasion and insider trading. The third and final purpose for the establishment of criminal penalties is that such a move will bring Australia into line with international best practice. The United States has had recourse to criminal penalties for cartel conduct since the passage of the Sherman Antitrust Act 1890 and it has strengthened its maximum prison term from three to 10 years. In 2003, the UK introduced criminal penalties that could result in an unlimited fine to an individual and/or up to five years in jail. Many other countries—among them Ireland, Germany, Japan, France, Israel and Canada—also provide for fines and imprisonment for crimes of this nature.

I will not go into exhaustive detail about the content of this bill. There are, however, some key features and provisions which are worthy of specific mention. The dishonesty element will be removed and the fault elements under the Criminal Code, being intention, knowledge or belief, will be applied to offences. A parallel system of civil prohibitions will be introduced to deal with serious cartel behaviours. This scheme will comprise the same elements as the criminal offences, but the latter will require proof beyond reasonable doubt. If parallel criminal and civil prosecutions ensue, the civil proceedings will be adjourned until the criminal proceedings are determined and, if the defendant is convicted, the civil proceedings will be discontinued.

The legal tests used to determine whether a provision qualifies as a cartel provision, as defined, have changed. The Telecommunications Interception and Access Act 1979 will be amended to allow the use of telecommunications intercepts in investigations. A joint venture defence will apply in civil and criminal actions if the parties to an agreement are or will be carrying on a joint venture and the cartel provision goes to the purpose of that joint venture. A maximum 10-year term of imprisonment and/or a fine of $220,000 for individuals will be established and augmented by the strengthening of sanctions for corporations. The protection of whistleblowers will be ensured and the offer of immunity to the first eligible cartel member to expose an arrangement will be available. In such cases, the ACCC will manage the immunity in consultation with the DPP. These measures are to be applauded.

Anticompetitive behaviours are abhorrent. They are morally reprehensible. The community rejects them. Our government will deal with them decisively. It is in the light of these strictures that I commend the provisions of the Trade Practices Amendment (Cartel Conduct and Other Measures) Bill here this evening.