A Q&A guide to cartel leniency law in Australia.
The Q&A gives a succinct overview of leniency and immunity, the applicable procedure and the regulatory authorities. In particular, it covers the conditions to be satisfied, the method of making an application, availability of immunity from civil fines to individuals, the scope of leniency, circumstances when leniency may be withdrawn, leniency plus, confidentiality and disclosure, and proposals for reform.
To compare answers across multiple jurisdictions visit the Cartel leniency Country Q&A tool.
This Q&A is part of the PLC multi-jurisdictional guide to competition and cartel leniency. For a full list of jurisdictional Cartel Leniency Q&As visit www.practicallaw.com/leniency-mjg.
For a full list of jurisdictional Competition Q&As, which provide a high level overview of merger control, restrictive agreements and practices, monopolies and abuse of market power, and joint ventures in multiple jurisdictions, visit www.practicallaw.com/competition-mjg.
Australia's Competition and Consumer Act 2010 (Cwlth) (Act) contains a parallel regime of civil prohibitions and criminal offences for cartel conduct.
To encourage participants in cartels cease engaging in the conduct and to voluntarily notify cartel conduct, there are immunity (see Question 4), leniency (see Question 5) and amnesty plus (see Question 13) regimes. The Australian Competition and Consumer Commission (ACCC) administers all three regimes (see below, Regulatory authority).
The ACCC's 2009 Immunity Policy for Cartel Conduct (Immunity Policy) sets out when full immunity for cartel conduct will be available. The ACCC's Cooperation Policy for Enforcement Matters (Cooperation Policy) sets out when leniency (reduced penalties) in a prosecution for cartel conduct will be available.
All applications for civil and criminal immunity and leniency must be made to the ACCC. If the ACCC refers a case to the Commonwealth Department of Public Prosecution (DPP) for consideration for criminal prosecution, the ACCC will make a recommendation to the DPP as to whether the latter should grant immunity from, or leniency in, a criminal prosecution. The DPP will take the ACCC's recommendation into account but it must make an independent decision when determining whether to grant immunity or leniency in a criminal prosecution for cartel conduct.
The ACCC's Immunity and Cooperation Policies cover proceedings for contraventions of the civil prohibitions on cartel conduct in Division 1 of Part IV of the Act, as well as the prohibition against exclusionary provisions in Division 2 of Part IV of the Act.
The DPP's Prosecution Policy covers prosecutions for criminal cartel offences under Division 1 of Part IV of the Act. The DPP's Prosecution Policy mirrors the ACCC's Immunity and Cooperation Policies.
In the global air freight cargo cartel, Lufthansa was the first airline to contact the ACCC about the cartel and received full immunity from civil prosecution. British Airways and Qantas contacted the ACCC after Lufthansa. The Federal Court of Australia accepted the ACCC's submissions that the two airlines should receive leniency in the form of a reduced civil fine for approaching the ACCC under its Cooperation Policy and fully co-operating with the ACCC's investigation (see Australian Competition and Consumer Commission v Qantas Airways Ltd (ACN 009 661 901) and Australian Competition and Consumer Commission v British Airways PLC [2008] FCA 1977). The ACCC has obtained civil penalties of A$98.5 million to date in its prosecutions against a number of other airlines involved in the cartel, the highest total penalties resulting from a single ACCC investigation. Proceedings against Air New Zealand Ltd and PT Garuda Indonesia Limited are ongoing at the time of writing.
In the local cardboard packaging cartel involving Visy and Amcor, Amcor and its former senior executives received immunity from civil proceedings by the ACCC after the company reported the infringing conduct to the ACCC. Immunity was conditional on Amcor and its executives fully co-operating with, and providing information about, the alleged cartel on an ongoing basis to the ACCC. In 2007, an A$36 million penalty was imposed on Visy, with two Visy executives also required to pay penalties of A$1.5 million and A$500,000 respectively. Visy did not admit its involvement in the cartel until after the commencement of a contested trial (see Australian Competition and Consumer Commission v Visy Industries Holdings Pty Ltd (No 3) (2007) 244 ALR 673). The ACCC proceedings were followed by a separate class action against both companies which settled for A$95 million.
To receive immunity from civil prosecution under the Immunity Policy, an undertaking must:
Be or have been party to a cartel.
Admit that its conduct in respect of the cartel may constitute a contravention or contraventions of the Act.
Be the first person to apply for immunity in respect of the cartel under the Immunity Policy (that is, be "first-in" to the ACCC).
Not have coerced others to participate in the cartel and not been the clear leader in the cartel.
Either have ceased its involvement in the cartel or indicate to the ACCC that it will cease its involvement in the cartel.
Ensure its admissions constitute a truly corporate act (as opposed to isolated confessions of individual representatives).
Undertake to provide full disclosure and co-operation to the ACCC on an ongoing basis.
In addition, at the time the ACCC receives the application for immunity, it must not already have sufficient evidence to commence proceedings in relation to at least one contravention of the Act arising from the alleged cartel conduct.
In relation to immunity applications by individuals, see Question 6.
Where an undertaking or individual fails to secure immunity, leniency may be available under the Cooperation Policy. To be eligible for leniency under the Cooperation Policy, an undertaking must comply with all of the requirements in the Immunity Policy (see Question 4) except that the undertaking need not be the first-in.
There is no set sliding scale for leniency but a fully co-operating party that is second to contact the ACCC can obtain a maximum fine reduction of between 40% and 50%. The Cooperation Policy does not limit the number of undertakings that can receive leniency in relation to a cartel.
If an undertaking successfully applies for conditional immunity or leniency, all current and former directors, officers and employees of the undertaking who request immunity, admit their involvement in the undertaking's cartel conduct and provide full disclosure and co-operation to the ACCC, will be eligible for derivative immunity.
Where no corporate application for immunity has been made, an individual can apply to the ACCC for immunity or leniency. The applicable conditions are the same as for corporate applicants (see Questions 4 and 5), subject to two differences:
As opposed to being a party to a cartel, the individual must be or must have been a director, officer or employee of an undertaking that is or was a party to a cartel.
The individual's application for immunity or leniency need not be a truly corporate act.
Where an individual fails to fully co-operate, the ACCC may revoke the conditional grant of immunity (see Question 11). An individual's failure to co-operate may also have implications for the success of their employer's leniency application. While failure to secure the co-operation of one or more employees will not automatically prevent the ACCC from granting immunity to the employer of the individual, the ACCC could revoke the employer's conditional immunity if the employer has not taken all legal and reasonable steps to secure the co-operation of its directors, officers and employees.
The DPP applies the same criteria in determining whether to grant immunity or leniency to corporations and individuals during a criminal prosecution for cartel conduct as the ACCC's Immunity Policy or the Cooperation Policy, as the case may be.
Derivative immunity may be available (see Question 6). In some circumstances, the ACCC may exclude certain current or former directors, officers or employees from immunity. For example, the ACCC would be unlikely to grant immunity to a former executive of the immunity applicant who continued to participate in the cartel while employed by another participant.
An employee's derivative immunity will continue even if the employee subsequently ceases to be employed by the corporate applicant for immunity, provided they continue to satisfy the requirements for conditional immunity, including by giving ongoing full co-operation. A failure to give full co-operation could result in the ACCC revoking the employee's derivative immunity.
The ACCC encourages parties to come forward as soon as they become aware that they may have been involved in cartel conduct, and before internal investigations are completed. However, there is an important balance to be struck between the need to protect undertakings and their officers and employees from prosecution, or to reduce the potential adverse consequences of prosecution, and properly assessing the potential exposure of the undertaking and its officers and employees. An undertaking is unlikely to thank its advisors for not taking steps to secure immunity when immunity was available and instead conducting a careful assessment of potential exposure. However, an undertaking is equally unlikely to thank its advisors for applying for conditional immunity, even when that is expressed to be on the basis that it is unclear where the undertaking has a liability, only to have to later withdraw the application and to explain to the ACCC why there is no liability.
Applicants can also place a marker to retain their position in the queue and move up the queue to first place if the immunity applicant fails to perfect their marker (see Question 9, Markers).
All applications for leniency from criminal and civil penalty proceedings must be made to the ACCC.
An application for leniency can only be made by one party to the cartel, whether an undertaking or an individual, or by their legal representative. The ACCC does not accept joint applications by or on behalf of more than one party. Where a partnership or a sole trader is a party to a cartel, the individuals' application will be considered as a corporate application for the purposes of the immunity policy.
Parties considering making an application for leniency, or their legal representatives, can approach the ACCC on a hypothetical basis, to seek an indication of the likelihood of a grant of immunity or leniency. The ACCC will not give definitive answers, but will provide guidance on the probable course of action it would take, and will advise prospective applicants if a first-in marker is available for the particular cartel conduct.
There is no standard form for an immunity application or for a request for a marker. The information provided should include sufficient information to satisfy the conditions for conditional immunity (see Questions 4 and 6).
The marker system allows an applicant to secure its place in the leniency queue for a limited period of time (usually 28 days) to allow it to complete internal investigations before perfecting its application. In addition, a marker allows the applicant to move up the queue to first place if the immunity applicant fails to perfect their marker.
A marker request generally precedes most applications for immunity and leniency. Joint applications are not accepted (see above, Applicant).
While there are no set guidelines in this respect, the ACCC expects applicants to satisfy the criteria in its Immunity and Cooperation Policies (including the provision of evidence about the existence of the cartel). The type of information/evidence varies greatly from case to case but typically includes evidence of phone calls, e-mails, discussions, file notes, information or agreements which establish the existence of the cartel.
Applicants for immunity or leniency can choose to give oral statements to the ACCC about the cartel and their involvement in it.
Not applicable.
There is no set timetable for applying for, or granting, immunity or leniency. Where a person requests a marker and one is available, the ACCC will negotiate the amount of time the person requires to complete their internal investigations and provide the ACCC with the necessary information to satisfy the requirements for conditional immunity or leniency. Typically, a marker will be valid for up to 28 days.
Once the marker period has lapsed, the ACCC has discretion to extend this period, if requested, but it must be satisfied that the delay is justified and not disproportionate to the investigation.
Where a marker lapses, another person can apply for immunity or move up the queue for immunity. For example, if the second applicant requests a marker after the first-in marker lapses or is withdrawn, the second-in person has the opportunity to satisfy the requirements for immunity.
Once the ACCC has been provided with information from the marker recipient, it determines whether the marker recipient satisfies the requirement for immunity or leniency and grants conditional immunity or leniency, as applicable. Immunity or leniency is conditional on the applicant meeting its ongoing obligation to fully co-operate with the ACCC.
The ACCC usually only grants final immunity once any proceedings against other cartel participants are resolved, although it may grant final immunity at an earlier stage.
The ACCC may revoke immunity or leniency where it believes a person has failed to comply with any of the requirements for immunity or leniency. The ACCC will notify the applicant in writing if immunity or leniency is to be revoked and give the applicant a reasonable opportunity to respond.
The Director of the DPP may, at any time prior to conclusion of any criminal proceedings, revoke immunity or leniency based on a recommendation from the ACCC if the DPP, exercising independent discretion, agrees with the recommendation. The DPP may also revoke immunity or leniency without a recommendation from the ACCC where the applicant provided information that is false or misleading, or has not fulfilled the conditions of immunity or leniency. The DPP will notify the applicant in writing if immunity or leniency is to be revoked and give the applicant a reasonable opportunity to respond.
Immunity provides full amnesty from enforcement action (that is, civil proceedings by the ACCC, and criminal prosecution by the DPP) in respect of the relevant cartel. Leniency offers lenient treatment during enforcement action (that is, a reduced penalty in civil proceedings and a reduced jail sentence and/or fine in criminal proceedings).
The conduct for which immunity or leniency is granted is determined by the way the application for immunity or leniency is framed, provided it is framed reasonably. For example, if an application for immunity or leniency is expressed as an application that relates to cartel conduct in a particular industry extending back to 2006, as long as the applicant fully complies with the Immunity or Cooperation Policy (as the case may be), and even if the ACCC gathers evidence of the cartel conduct from an undertaking who is not the applicant, immunity or leniency should be granted based on the scope of the application.
However, immunity and leniency do not protect the recipient from private actions for civil or criminal damages. Anyone who suffers loss or damage as a result of cartel conduct can recover the amount of their loss or damage through private court action, subject to applicable limitation periods (see Question 14).
The ACCC's immunity policy includes an amnesty plus regime for cartel participants that are ineligible for immunity in a cartel already under investigation but who provide the ACCC with evidence of a second cartel, of which it was not previously aware. Applicants that satisfy the ACCC's amnesty plus policy gain immunity for the second cartel and additional fine reduction for the first cartel. The conditions of the amnesty plus policy are the same as the conditions under the Immunity Policy (see Question 4).
The grant of immunity or leniency does not provide any protection from private actions for civil or criminal damages. Anyone who suffers loss or damage as a result of cartel conduct can recover the amount of their loss or damage through private court action, subject to a six-year limitation period. There have been no private actions (including class actions) for civil damages from cartel conduct to date that have not settled.
While the grant of immunity or leniency by the ACCC or DPP will not necessarily be prima facie evidence of the underlying breach, information provided to the ACCC in support of an application for immunity or leniency may be subject to a discovery order for use as evidence in follow-on actions for damages (see Question 16, Domestic submissions and domestic discovery).
The ACCC may advise a person who has requested a marker or applied for immunity or leniency that another person has already sought a marker or applied for immunity, but it does not disclose the identity of that other person.
There is a risk that a Court may order the disclosure of the identity of an immunity applicant in some circumstances, even at an early stage of Court proceedings (see ACCC v Prysmian Cavi E Sistemi Energia SRL [2011] FCA 938).
Information provided by immunity applicants may be used by the ACCC in civil proceedings, and may be shared with the DPP for criminal prosecution purposes. However, the information will not be used as evidence against the applicant in respect of the relevant cartel, unless the applicant fails to comply with its obligations under a grant of conditional immunity (see Question 16, Domestic submissions and domestic discovery).
Immunity applicants can request anonymity and may ask the ACCC to treat information as confidential (or "protected information") (section 155AAA, Act). In practice, the ACCC typically satisfies these requests. However, the ACCC is entitled to disclose such information in certain circumstances, including in the performance of its duties or functions or if otherwise required or permitted by law.
The ACCC does not use information it receives in support of an application for immunity or leniency as evidence in proceedings against the applicant, or entities or employees of a corporate applicant, in respect of the relevant cartel. However, if a grant of conditional or full immunity or leniency is later revoked because the applicant failed to satisfy the requirements for immunity or leniency (as the case may be), the ACCC may use such information against the immunity applicant in any obstruction proceedings in respect of the applicant's failure to comply with a section 155 notice. A section 155 notice is a summons to produce information or documents to the ACCC, or to appear in person before the ACCC for cross-examination under oath without privilege against self-incrimination.
Information provided to the ACCC in support of an immunity application, or obtained in the course of an ACCC investigation, and used in civil proceedings instigated by the ACCC, may be subject to discovery orders by Australian courts. If subject to a discovery order, there is an implied undertaking that the information cannot be used for purposes other than use in the proceedings in which they were required to be disclosed (Jarra Creek Central Packing Shed Pty Ltd v Amcor Ltd [2008] FCA 391 at [3]) (for example, in third party private actions arising from the alleged cartel conduct). However, the implied undertaking may be overruled by inconsistent statutory provisions or orders of a court. In addition, parties receiving information may, in special circumstances, be released from the implied undertaking. (The Court cannot grant blanket release, but may order the parties to narrow the scope of the documents sought and allow affected third parties to make submissions to the court on any prejudice that may arise if the release were granted.)
The ACCC is empowered to share protected information with foreign regulators (section 155AAA(12)(n), Act). However, the ACCC's policy is not to do so unless required by law, or with the consent of the applicant.
The ACCC has publicly stated that it will seek consent from immunity applicants for the disclosure of information provided in support of an immunity application to foreign competition regulators as a matter of course.
Whether foreign submissions can be made subject to discovery in Australia will depend on the entity making the submissions, the relevance of the submissions to the Australian proceedings, and the laws of the foreign jurisdiction. In Australia, a discovery request must relate to relevant documents (that is, it cannot be part of a fishing expedition).
A number of memoranda of understanding and international agreements form the basis for international co-operation between Australian authorities and authorities in other jurisdictions including New Zealand, the European Union, the United Kingdom, Canada, South Korea, Chinese Taipei (Taiwan), Fiji and Papua New Guinea. Australia has also signed a bilateral treaty on mutual anti-trust enforcement with the United States and provisions of the Australia-United States Free Trade Agreement require co-operation on investigation and enforcement matters.
There are no current proposals to reform the prohibitions on cartel conduct in Australia.
Description. ComLaw is an Australian government website which contains the full official text of Australian Commonwealth government legislation, including the CCA. ComLaw is managed by the Office of Parliamentary Counsel.
Head. Rod Sims (Chairman)
Contact details. 23 Marcus Clarke Street
Canberra ACT 2601
Australia
T +61 2 6243 1111
E rod.sims@accc.gov.au
W www.accc.gov.au
Responsibilities. The ACCC is responsible for administering, and enforcing compliance with, the Act. It is also responsible for prosecuting breaches of the civil prohibitions of the Act, and where appropriate, granting immunity (or leniency) from civil prosecution.
Person/department to apply to. Marcus Bezzi, Executive General Manager, Enforcement and Compliance Division, ACCC
Level 20175 Pitt Street
Sydney NSW 2000
Australia
T + 61 2 9230 3894
F + 61 2 6243 1199
E marcus.bezzi@accc.gov.au
Procedure for obtaining application documents. There is no standard application form (an application can also be made orally).
Head. Robert Bromwich SC (Director)
Contact details. 4 Marcus Clarke Street
Canberra ACT 2601
Australia
T +61 2 6206 5666
E inquiries@cdpp.gov.au
W www.cdpp.gov.au
Responsibilities. The DPP is responsible for prosecuting offences against Commonwealth law, including cartel offences under the Act, in accordance with the Prosecution Policy of the Commonwealth. The DPP is not an investigatory agency, and therefore prosecutes only those cartel offences that have been referred to it by the ACCC.
Person/department to apply to. Applications should be made to the ACCC as described above.
Procedure for obtaining application documents. This is the same as in relation to the ACCC (see above).
King & Wood Mallesons
Partner
T +61 2 9296 2294
F +61 2 9296 3999
E sharon.henrick@au.kwm.com
W www.kwm.com
Qualified. Australia, 1994
Areas of practice. Large scale commercial transactions and investigations in relation to competition law in Australia/Asia Pacific in a number of client sectors.
Recent transactions.
Advised:
Professional associations/memberships.
Publications.
Co-author of a chapter on Australian merger law in Merger Control Worldwide, published by Cambridge University Press.
Published several articles on competition law, including in the Australian Trade Practices Law Journal and Competition Insights, and regularly contributes to PLC's and Global Competition Review's publications.
King & Wood Mallesons
Partner
T +61 2 9296 2327
F +61 2 9296 3999
E wayne.leach@au.kwm.com
W www.kwm.com
Qualified. Australia, 1996
Areas of practice. Large scale commercial transactions and investigations in relation to competition law in Australia/Asia Pacific in a number of client sectors.
Recent transactions.
Advised:
Professional associations/memberships.
