Alert

The Australian Competition and Consumer Commission (ACCC) has issued a new policy allowing for immunity from civil prosecution for cartel conduct. The new policy starts operating at 9.00 am on 5 September 2005, and replaces the existing leniency policy for cartel conduct which was introduced in June 2003.

The immunity policy provides an incentive to businesses and individuals to disclose cartel conduct. It streamlines applications for immunity and incorporates many features of amnesty policies operating in other jurisdictions, such as the United States. The ACCC has also issued interpretation guidelines to assist in understanding the application of the immunity policy.

The immunity policy applies to all businesses regardless of size and irrespective of whether they are incorporated and to individuals who have engaged in cartel conduct affecting Australian markets. Cartel conduct is defined as any of the following conduct engaged in by two or more businesses who are, or otherwise would be, in competition with each other:

• price fixing
• market sharing including bid rigging, customer sharing and market allocation
• agreements not to compete with each other or to limit or restrict competition between the businesses, and
• production or sales quotas.

Main features of the immunity policy

A corporation or individual will be eligible for immunity from civil prosecution where they:

• are the first person to apply for immunity
• were a party to the cartel
• admit that their conduct may constitute a contravention of the Trade Practices Act 1974 (Cth) (TPA)
• were not the cartel leader or coerced others to participate in the cartel
• have ceased involvement in the cartel, and
• are prepared to provide full disclosure and cooperation to the ACCC in its investigation and prosecution of the cartel.

Immunity is available up until the time the ACCC receives written legal advice that it has sufficient evidence to commence proceedings in relation to at least one contravention of the TPA arising from the cartel’s conduct.

The implementation of a “marker” system. An immunity applicant may approach the ACCC and obtain a marker which preserves that person’s place in the immunity queue. The marker gives the applicant a limited period of time, generally up to 28 days, to complete internal investigations and gather the information necessary to perfect an application for immunity. As long as a person holds the marker for particular cartel conduct, no other person involved in the same cartel will be allowed to take that person’s place. If the marker holder fails to perfect an application within the time specified, then the next marker holder may apply for immunity. A potential applicant can approach the ACCC on a hypothetical basis to determine if a marker is available.

Where a corporation obtains immunity under the immunity policy, all current and former employees who admit their involvement in the conduct will also be eligible for immunity from ACCC initiated civil proceedings (called “derivative immunity”).

If the ACCC suspects that a cartel is operating, it may approach one or more persons suspected to be involved in the cartel, inform them of the immunity policy and encourage them to apply.

The ACCC will allow oral applications for immunity (often referred to as a “paperless application”). Under the previous leniency policy written applications were required. As a result, there were concerns that the applicant’s leniency application documents were unprotected by legal privilege and were discoverable by third parties, such as class action plaintiffs in other jurisdictions. A paperless process permits the applicant to apply for immunity without generating any new documents which could involve admissions or other incriminating information.

Currently, the immunity policy only applies to civil contraventions of the TPA. However, the Government has indicated that it intends to introduce criminal sanctions for cartel conduct. The ACCC has stated it will amend the immunity policy and guidelines as necessary to accommodate the criminalisation of cartel conduct.

The immunity policy is the result of an ACCC review which sought submissions from interested parties on improving the operation of the leniency policy. Mallesons provided a submission to the review and many of our recommendations have been incorporated in the new immunity policy.