LAW ASSIGNMENT 2 1) Price fixing occurs where competitors agree, expressly or tacitly, to fix, control or maintain prices, discounts,

allowances, rebates or credits in relation to the goods or services that they supply. For the ACCC there are problems in deciding how to deal with the interaction between its highly acclaimed Immunity Policy for Cartel Conduct and the criminalisation of serious cartel conduct, the rise in private enforcement and damages claims in relation to cartel conduct, the increased significance of cartel case settlement or, in the criminal context, plea negotiation, and the potential strategy of offering alternative financial rewards for cartel information. Cartel settlements do have drawbacks or trade-offs. Perhaps one of the most significant is the potential for a settlement policy to detract from the efficacy of a jurisdictions immunity program. Specifically, the option of settlement has the capacity to undermine the incentives for cartel participants to seek the protection offered by an immunity policy or to be motivated to do so as rapidly as possible for fear of losing the race to the confessional to a co-conspirator. At the same time, such issues are increasingly regarded as manageable through the proper design and implementation of a settlement system, rather than as a reason for not having such a system. The Australian Competition and Consumer Commission (ACCC) have a formal policy regarding settlement of enforcement matters generally. That policy and its relationship with the ACCC Immunity Policy (as well as the ACCCs former leniency policy for such conduct) are outlined. Upon introduction of the new criminal regime, it will be the Commonwealth Director of Public Prosecutions (DPP) that is responsible for negotiating the deal with defendants who do not seek to contest the criminal charges against them hence, the DPPs approach to plea negotiations must also be considered. As in relation to the immunity policy, the two agencies should liaise closely on such matters. In 2002 the ACCC published its Cooperation Policy for Enforcement Matters. The policy is expressed in general terms and applies to corporations and individuals in relation to all potential contraventions of the Trade Practices Act 1974 (Cth) (TPA).The nature and extent of the

leniency, including complete or partial immunity from action by the commission, submissions to the court for a reduction in penalty or even administrative settlement in lieu of litigation, is assessed on a case-by-case basis having regard to the requirements set out in the policy. For an individual those requirements are: coming forward with valuable and important evidence of a contravention of which the ACCC is either otherwise unaware or has insufficient evidence to initiate proceedings; providing the ACCC with full and frank disclosure of the activity and relevant documentary and other evidence available to them; undertaking to cooperate throughout the commissions investigation and complying with that undertaking; agreeing not to use the same legal representation as the firm by which they are employed; not having compelled or induced any other person or corporation to take part in the conduct or having been a ringleader or originator of the activity. For corporations, additional requirements are: taking prompt and effective action to terminate its part in any activity; being prepared to make restitution where appropriate; being prepared to take immediate steps to rectify the situation and ensuring that it does not happen again; and not having had a prior record of TPA or related offences. In practice, many negotiated settlements and joint submissions to the court on penalties flow from the operation of the Cooperation Policy. The policy states that the ACCC is prepared to make such submissions if it is satisfied that a corporation or individual, which has not been granted an immunity, In terms of the procedure for applying for leniency, the Cooperation Policy is very brief, indicating that the applicant should approach the appropriate contact officer and the commission will then determine the application on a case-by-case basis. The commission is open to discussion of hypothetical scenarios about involvement in conduct that might contravene the Act and, while not able to provide definitive answers, the ACCC will provide guidance as to the probable course of action it would take. The policy contains no provision for paperless applications, confidentiality, or revocation. It has not been amended since its introduction in 2002. In June 2003 the ACCC launched its Leniency Policy for Cartel Conduct, the aim of which was to

provide greater certainty and incentive for disclosure for cartel participants. The Leniency Policy provided two levels of protection (Part A immunity from prosecution, and Part B immunity from penalty). Meanwhile, the Cooperation Policy remained available as a policy under which the ACCC was able to grant immunity from prosecution and penalty to persons who did not qualify for Part A or Part B immunity under the Leniency Policy. In a review of the Leniency Policy in 2005, the ACCC recognised that the interaction between the policy and the Cooperation Policy was critical. The ACCC published a leniency policy in June 2003 which operates where the ACCC is not aware of a cartel, or is aware but does not have sufficient evidence to prosecute, a cartel. The leniency policy has been developed by the ACCC to reward the first party in a price fixing arrangement who approaches the ACCC with information about the price fixing behaviour. The first party to come forward receives immunity from court proceedings instituted by the ACCC. Under s.80 of the TPA, it is not a prerequisite to the grant of an injunction that there is a threat of repeat contraventions; it is enough that a person has previously engaged in the conduct sought to be enjoined.1 Injunctions may be granted for the purposes of deterrence.2 An important factor for the Court to consider is whether the injunction should be permanent or limited in time. Different judges have expressed different views about the merits of the alternative approaches. 3 Section 76(1) of the TPA requires the Federal Court to set an appropriate pecuniary penalty having regard to all relevant matters.4 Until early 1994, all penalties for those found guilty of pricefixing were determined by the Court on the basis of evidence and submissions. In the two most

ACCC v Midland Brick Co Pty Ltd (2004) 207 ALR 329 at [43]; BMW Australia Limited v ACCC (2004) 207 ALR 452 2 ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 268 per French J; ACCC v Midland Brick Co Pty Ltd (2004) 207 ALR 329 3 See ACCC v Signature Security Group Pty Limited (2003) FCA 375 at [3]-[4] per Stone J; ACCC v Midland Brick Co Pty Ltd (2004) 207 ALR 329 at [45] [47]; ACCC v Liquorland (Australia) Pty Ltd (2005) FCA 683 at [69][71] per Gyles J; ACCC v Liquorland (Australia) Pty Limited (No 2) (2006) FCA 1799 per Allsop J; ACCC v IPM Operation and Maintenance Loy 4 There are 12 factors recognised as relevant matters to take into consideration. Nine factors are from French J in Trade Practices Commission v CSR Ltd (1991) 13 ATPR 41-076, 52 1523. Note that this was not a price-fixing case. The remaining three factors are from Heerey J in the first instance decision of Frozen Foods (1996) 18 ATPR 41-515, 42 4445.

recent cases, FFE and Midland Brick, the agreed pecuniary penalties submitted to the Federal Court were not accepted by the two judges (Wilcox and Lee JJ respectively).5 The Australian Competition and Consumer Commission has instituted proceedings alleging price fixing by brick manufacturers, Bristile Operations Pty Ltd, trading as Metro Brick, and Midland Brick Company Pty Ltd (trading as Midland Brick) in the Federal Court, Perth. Midland Brick Receives Corporate Immunity From Price Fixing Penalty.Midland Brick escaped the imposition of pecuniary penalties under the ACCC's Leniency Policy on Cartel Conduct by being the first company to come forward and inform the ACCC of the price fixing arrangements. The ACCC is seeking declarations, injunctions, pecuniary penalties, other remedial orders and costs. Sections 45, 46 and 47 of the Act (together with sections 4D and 45A) already prohibit conduct of the kind but do not create separate offences for such activities as price fixing, bid rigging, collusive tendering or market sharing. And, of course, the contravention of those sections carries only a civil penalty. However, it is apparent that the ACCC's proposal is that criminal offences should be created outside the Act (for example, by inclusion in the Commonwealth Crimes Act 1914) and that those offences should not extend to all the conduct prohibited by sections 45, 46 and 47. Only cartel conduct which may be described as 'hard-core' would be criminalised. Initially the ACCC submitted that criminal sanctions should only be applied to large corporations, because only large corporations were likely to be involved in international cartels. However, this met with opposition from those who would otherwise support criminal sanctions but who could not accept that the same behaviour should be criminal for some persons, namely, large corporations and their directors and employees and not for others, namely, smaller corporations and their directors and employees. It was pointed out by way of example that proceedings arising out of a price-fixing agreement between a large and a small corporation could, under the ACCC's proposal, result in the imposition of a term of imprisonment upon the directors and employees of the large corporation but not upon those of the small corporation, although the moral culpability was the same. In response to these views, the ACCC accepted that a crime for one should be a crime for all and proposed the criminalisation of hard-core cartel behaviour for all, and not just large, corporations. In doing so,
5

The Australian Competition and Consumer Commission v Midland Brick Co Pty Ltd (2004) 207 ALR 329 (Midland Brick)

it remarked that there would be a judicial discretion to impose lesser penalties where the impact of the cartel was limited and this was likely to ensure appropriate penalties for offences by smaller corporations.6 A number of companies are currently being prosecuted by the ACCC in the Federal Court of Australia (in separate actions) for alleged price fixing conduct. Subject to this proviso, the Committee recommends the introduction of criminal sanctions for serious, or hard-core, cartel behaviour, with penalties to include fines against any convicted corporation and imprisonment and fines, as appropriate, for implicated individuals.

see eg, Australian Competition and Consumer Commission v Woolworths (South Australia) Pty Ltd (2003) ATPR 41-941