Beaton-Wells, Caron --- "Capturing the Criminality of Hard Core Cartels: The Australian Proposal" [2007] MelbULawRw 29; (2007) 31(3) Melbourne University Law Review 675
[∗] BA, LLB (Hons), LLM, PhD (Melb); Director of Studies, Competition Law, Melbourne Law School, The University of Melbourne; Barrister, Victorian Bar. The author acknowledges the research assistance of Neil Brydges, JD candidate at the Melbourne Law School and thanks Brent Fisse for his comments on an earlier draft. Any omissions or errors are the sole responsibility of the author.
[1] Peter Costello, Treasurer of Australia, ‘Criminal Penalties for Serious Cartel Behaviour’ (Press Release, 2 February 2005).
[2] Ibid.
[3] Doorstop Interview with Wayne Swan (Melbourne, 1 February 2005) <http://www.alp.org.au/
media/0205/dsitre020.php?print=on>.
[4] Lenore Taylor and Matthew Drummond, ‘Business Reform to Be Fast‑Tracked’, The Australian Financial Review (Melbourne), 5 December 2007, 10.
[5] Christopher Harding, ‘Business Collusion as a Criminological Phenomenon: Exploring the Global Criminalisation of Business Cartels’ (2006) 14 Critical Criminology 181.
[6] David J Gerber, Law and Competition in Twentieth Century Europe: Protecting Prometheus (2001).
[7] As at 2006, the list of countries providing criminal liability for cartel participation included Austria, Brazil, Canada, Chile, Croatia, France, Germany, Greece, Ireland, Israel, Italy, Japan, Mexico, Norway, the Slovak Republic, South Korea, Switzerland, the United Kingdom and the United States. Many of these countries did not have criminal cartel laws prior to the mid‑1990s.
[8] See, eg, Scott D Hammond, ‘Charting New Waters in International Cartel Prosecutions’ (Paper presented at the 20th Annual National Institute on White Collar Crime, San Francisco, 2 March 2006) <http://www.usdoj.gov/atr/public/speeches/214861.pdf> .
[9] See Recommendation of the Council Concerning Effective Action against Hard Core Cartels, OECD Doc C(98)35/FINAL (1998). ‘Hard core’ was the term adopted by the OECD to identify those practices that it considered ‘the most egregious violations of competition law.’ It is a term that has since achieved widespread usage.
[10] Christopher Harding and Julian Joshua, Regulating Cartels in Europe: A Study of Legal Control of Corporate Delinquency (2003) 2.
[11] Trade Practices Act Review Committee, Australia, Review of the Competition Provisions of the Trade Practices Act (2003) 153. See also the discussion in Louise Castle and Simon Writer, ‘More than a Little Wary: Applying the Criminal Law to Competition Regulation in Australia’ (2002) 10 Competition & Consumer Law Journal 1, 10–14.
[12] See Brent Fisse, ‘The Proposed Australian Cartel Offence: The Problematic and Unnecessary Element of Dishonesty’ (Legal Studies Research Paper No 06/44, Sydney Law School, 2006); Philip Williams, ‘Commentary on Paper by Brent Fisse: “The Proposed Cartel Offence”’ (Commentary delivered at the 4th Annual University of South Australia Trade Practices Workshop, Barossa Valley, 20 October 2006). See also Justice R S French, ‘Penalties and Remedies under the Trade Practices Act 1974 (Cth)’ (Paper presented at the Trade Practices and Consumer Law Conference, Sydney, 23 June 2001) 22–4. Cf Justice Ray Finkelstein, ‘Criminalising Hard‑Core Cartels: Competition Law Enters the “Moral Universe”’ (Paper presented at the Cracking Cartels: International and Australian Developments Conference, Sydney, 25 November 2004).
[13] Sherman Act, c 647, 26 Stat 209 (1890). For the current version: see 15 USC §§ 1–7 (2000 & Supp IV, 2004).
[14] Maurice E Stucke, ‘Morality and Antitrust’ (2006) 4 Columbia Business Law Review 443, 448.
[15] Ibid, citing views expressed, for example, by the leading Chicago School advocate, Judge Richard A Posner: see Judge Richard A Posner, ‘Law and Economics Is Moral’ (1990) 24 Valparaiso University Law Review 163, 166.
[16] These concerns have been traced back to an influential article by Francis Sayre in 1933, in which he criticised the emergence of so‑called ‘public welfare offences’ on the grounds that offenders in such cases are ‘morally innocent and free from fault’: Francis Sayre, ‘Public Welfare Offenses’ (1933) 33 Columbia Law Review 55, 79.
[17] See, eg, Herbert L Packer, The Limits of the Criminal Sanction (1968) 359.
[18] See Stuart P Green, ‘Moral Ambiguity in White Collar Criminal Law’ (2004) 18 Notre Dame Journal of Law, Ethics & Public Policy 501, for a useful discussion of such factors.
[19] Sanford H Kadish, ‘Some Observations on the Use of Criminal Sanctions in Enforcing Economic Regulations’ (1963) 30 University of Chicago Law Review 423, 436.
[20] Stuart P Green, ‘Why It’s a Crime to Tear the Tag off a Mattress: Overcriminalization and the Moral Content of Regulatory Offenses’ (1997) 46 Emory Law Journal 1533, 1536, summarising the arguments made by critics of so‑called ‘regulatory overcriminalisation.’
[21] John Collins Coffee Jr, ‘Does “Unlawful” Mean “Criminal”?: Reflections on the Disappearing Tort/Crime Distinction in American Law’ (1991) 71 Boston University Law Review 193, 200. See also Henry V Ball and Lawrence M Friedman, ‘The Use of Criminal Sanctions in the Enforcement of Economic Legislation: A Sociological View’ (1965) 17 Stanford Law Review 197, 206–7; Tom R Tyler and John M Darley, ‘Building a Law‑Abiding Society: Taking Public Views about Morality and the Legitimacy of Legal Authorities into Account when Formulating Substantive Law’ (2000) 28 Hofstra Law Review 707, 714–24.
[22] Stuart P Green, Lying, Cheating, and Stealing: A Moral Theory of White‑Collar Crime (2006).
[23] Ibid 30, 44. For recent reviews of Green’s book, including criticisms of his framework: see Mitchell N Berman, ‘On the Moral Structure of White‑Collar Crime’ (Public Law and Legal Theory Research Paper No 118, The University of Texas School of Law, 2007); Peter J Henning, ‘The DNA of White Collar Crime’ (Wayne State University Law School Legal Studies Research Paper Series No 07‑19, 2007). Berman, in particular, is critical of the distinction drawn by Green between culpability and moral wrongfulness and also of the view, at least implicit in Green’s thesis, that the law should criminalise only conduct that is wrongful. Whatever their merit, these criticisms do not detract from the value of Green’s work in providing a framework for thinking about the criminality of serious cartel conduct and more specifically, the ways in which the elements of the new cartel offence ensure that the criminalised conduct is distinguished from conduct that is the subject of the civil penalty regime only. It is crucial to the integrity and effectiveness of the criminal regime (if not competition policy and doctrine more generally) that these differences are both evident and justifiable.
[24] Green, Lying, Cheating, and Stealing, above n 22, 45. Others identified by Green, of lesser relevance in the present context, include coercion, exploitation, disloyalty, promise‑breaking and disobedience.
[25] See, eg, Joel Feinberg, The Moral Limits of the Criminal Law: Harm to Others (1984) 34.
[26] Green, Lying, Cheating, and Stealing, above n 22, 45.
[27] Green argues that such an approach has an advantage over the more abstract rights‑based approach, in that the specified norms are fairly concrete in nature: ‘Even people who have never had occasion to read a single page of moral philosophy are capable of making finely grained distinctions about, say, what properly constitutes cheating or stealing’: ibid.
[28] Australian Competition and Consumer Commission v Visy Industries Holdings Pty Ltd [No 3] [2007] FCA 1617 (Unreported, Heerey J, 2 November 2007); Graeme Samuel, Chairman of the ACCC, ‘Opening Statement’ (Visy News Conference, 2 November 2007). The implications of this case for cartel criminalisation, amongst other things, are discussed in Caron Beaton‑Wells and Neil Brydges, ‘The Cardboard Cartel Case: Was All the Fuss Warranted?’ (2008) 36 Australian Business Law Review (forthcoming).
[29] There is also a good argument that moral issues arise in antitrust analysis regardless of whether it is regulated by a civil or criminal system: see Stucke, above n 14, 446–7; Christine Parker, ‘The “Compliance” Trap: The Moral Message in Responsive Regulatory Enforcement’ (2006) 40 Law & Society Review 591, 604 fn 14.
[30] Coffee, above n 21, 198. However, it is obviously assumed for these purposes that society is in fact capable of reaching a consensus about the moral status of certain acts and further, that ‘society’ in this context constitutes a single indivisible body of public opinion. For a discussion of the difficulties in ascertaining social consensus on such matters: see generally Neil Cooper, The Diversity of Moral Thinking (1981).
[31] Henry M Hart Jr, ‘The Aims of the Criminal Law’ (1958) 23 Law and Contemporary Problems 401, 424; Jerome Hall, General Principles of Criminal Law (1947) 157, 182; Andrew Ashworth, Principles of Criminal Law (5th ed, 2006) 16–17; Mirko Bagaric, ‘The “Civil‑isation of the Criminal Law”’ (2001) 25 Criminal Law Journal 184. The relevance of morality may also be understood having regard to the goals of a criminal regime and, in particular, the role of retribution as one of the established purposes of criminal sanctions. There are many versions of retributivism, but the core notion is that ‘punishment is justified when it is deserved’ and that ‘criminals deserve punishment because they violate norms established by society’: Green, ‘Why It’s a Crime to Tear the Tag off a Mattress’, above n 20, 1552, citing John Cottingham, ‘Varieties of Retribution’ (1979) 29 Philosophy Quarterly 238. See also Joshua Dressler, Understanding Criminal Law (4th ed, 2006) 11. There are those, however, who defend a consequentialist justification for the criminal law, arguing that criminal sanctions may be invoked out of concern solely for the prevention of social harms, as distinct from the punishment of moral wrongs: see, eg, Barbara Wootton, Crime and the Criminal Law (2nd ed, 1981). There are also those who take the extreme position that the criminal law has been so overused that it is now devoid of any overarching justification and ‘the threshold for making an activity criminal is so low that equally strong argument can be made for criminalizing most activities which involve some degree of harm, risk or non‑conformist behaviour’: Julie Clarke and Mirko Bagaric, ‘The Desirability of Criminal Penalties for Part IV of the Trade Practices Act’ (2003) 31 Australian Business Law Review 192, 199.
[32] Stucke, above n 14, 510–14. For a detailed examination of the extent to which cartel criminalisation has the support of key stakeholders in Australia: see Caron Beaton‑Wells, ‘Criminalising Cartels: A Slow Conversion?’ (Paper presented at the Fifth Annual University of South Australia Trade Practices Workshop, Rowland Flat, 19 October 2007).
[33] Such an argument has support in the regulation and psychological literature which suggests that in a society in which people act on social values, citizens are motivated to obey the law based on normative considerations, specifically because they think: (1) that the behaviours prohibited by the law are also immoral; and (2) that legal authorities are legitimate and thus entitled to be obeyed: see, eg, Tyler and Darley, above n 21; Soren Winter and Peter May, ‘Motivation for Compliance with Environmental Regulations’ (2001) 20 Journal of Policy Analysis and Management 675; Jon Sutinen and Karen Kuperan, ‘A Socio‑Economic Theory of Regulatory Compliance’ (1999) 26 International Journal of Social Economics 174. The argument also finds support in the criminological literature which reports that white‑collar criminals are affected not only by rational cost‑benefit analyses in deciding whether or not to offend, but also by their own moral beliefs and the threat of informal sanctions by way of disapproval by family and peers: see, eg, Lori A Elis and Sally S Simpson, ‘Informal Sanction Threats and Corporate Crime: Additive versus Multiplicative Models’ (1995) 32 Journal of Research in Crime and Delinquency 399; Raymond Paternoster and Sally Simpson, ‘Sanction Threats and Appeals to Morality: Testing a Rational Choice Model of Corporate Crime’ (1996) 30 Law & Society Review 549; see also Kadish, above n 19, 437. For specific reference to the moral impact of criminal antitrust enforcement: see Wouter P J Wils, ‘Leniency in Antitrust Enforcement: Theory and Practice’ (2007) 30 World Competition 25, 37.
[35] Peter H Karmel and Maureen Brunt, The Structure of the Australian Economy (1962) 94.
[36] TPA s 45(2).
[37] See s 45A of the TPA for the definition of a price‑fixing provision and s 4D for the definition of an exclusionary provision. The definition in s 45A would also incorporate most forms of market division, output restriction and bid‑rigging. The definition in s 4D goes beyond traditional boycott scenarios and would capture some types of cartel arrangement, such as market division.
[38] TPA s 45A(4).
[39] TPA ss 76C–D.
[40] TPA s 88.
[41] This procedure was introduced recently by the Trade Practices Legislation Amendment Act [No 1] 2006 (Cth) sch 3, amending the TPA, which took effect on 1 January 2007.
[42] TPA s 78. In the first attempt at competition regulation in this country, the Australian Industries Preservation Act 1906 (Cth), there were in fact criminal penalties that attached to the prohibitions on restraints of trade and monopolisation (at ss 4–9), reflecting developments in the US and the provisions of the Sherman Act, c 647, 26 Stat 209 (1890). Criminal penalties were removed from the subsequent Trade Practices Act 1965 (Cth) which, being modelled predominantly on the English rather than the US approach to antitrust, adopted an administrative rather than a judicial method of enforcement. For an explanation for these variations in approach to trade practices penalties: see Caron Beaton‑Wells, ‘The Politics of Cartel Criminalisation: A Pessimistic View from Australia’ (2008) European Competition Law Review (forthcoming).
[43] TPA ss 76(1A)–(1B).
[44] Trade Practices Legislation Amendment Bill [No 1] 2006 (Cth).
[45] Allan Fels, ‘Regulating in a High‑Tech Marketplace’ (Paper presented at the Australian Law Reform Commission, Penalties: Policy, Principles and Practice in Government Regulation
— Conference, Sydney, 9 June 2001) 3–6.
[46] Ibid.
[47] Ibid. For a discussion of the judicial approach to penalisation of breaches of the competition provisions of the TPA: see Caron Beaton‑Wells, ‘Recent Corporate Penalty Assessments under the Trade Practices Act and the Rise of General Deterrence’ (2006) 14 Competition & Consumer Law Journal 65.
[49] ACCC, Submission to the Trade Practices Act Review (2002).
[50] Trade Practices Act Review Committee, above n 11, 161–2.
[51] Ibid 153.
[52] Brent Fisse, ‘The Cartel Offence: Dishonesty?’ (2007) 35 Australian Business Law Review 235, 236 fn 4. Documents relevant to the freedom of information request are available at: Brent Fisse Lawyers <http://www.brentfisse.com> . The Administrative Appeals Tribunal will hear the application for review of the Treasury’s decision to refuse access to the report on 19 February 2008.
[54] Ibid.
[55] See Australian Government, Budget Paper No 2: Budget Measures 2006–07 (2006) pt 2.
[56] These documents are available at: The Treasury <http://www.treasury.gov.au/contentitem.asp?
NavId=037&ContentID=1330>.
[57] Given that this article was finalised for publication many months prior to the release of these documents, the analysis in this article is based on the 2005 proposals.
[58] Green, ‘Why It’s a Crime to Tear the Tag off a Mattress’, above n 20, 1547.
[59] Green, Lying, Cheating, and Stealing, above n 22, 30–1. For the purposes of this article, the broader concept of culpability has been employed, as reference is made to the possible defences and exceptions to the new cartel offence.
[60] Green, ‘Why It’s a Crime to Tear the Tag off a Mattress’, above n 20, 1547–8. It should be noted in this context that Green does not deal at any length with the particular challenges involved in establishing the culpability of corporate, as distinct from individual, actors. It is unclear at this stage whether the proposed cartel offence will be subject to the vicarious liability provisions in TPA s 84 or the provisions of the Criminal Code Act 1995 (Cth) on corporate criminal liability: see Brent Fisse, ‘The Australian Cartel Criminalisation Proposals: An Overview and Critique’ (2007) 4(1) Competition Law Review 51, 60–4.
[61] Green, ‘Why It’s a Crime to Tear the Tag off a Mattress’, above n 20, 1548. Cf Richard G Singer, ‘The Resurgence of Mens Rea III — The Rise and Fall of Strict Criminal Liability’ (1989) 30 Boston College Law Review 337, 338–9.
[62] See generally Julian Greenspun, ‘Criminal Intent Requirements and Defenses in Regulatory Prosecutions’ (1982) 18 Criminal Law Bulletin 293. See also the references in Green, ‘Why It’s a Crime to Tear the Tag off a Mattress’, above n 20, 1558 fn 74.
[63] Green, ‘Why It’s a Crime to Tear the Tag off a Mattress’, above n 20, 1548 fn 30. Cf John L Diamond, ‘The Myth of Morality and Fault in Criminal Law Doctrine’ (1996) 34 American Criminal Law Review 111.
[64] Sayre, above n 16, 56 fn 5, 69.
[65] Other non‑economic effects are taken into account, albeit only at the stage of considering whether or not the ACCC should authorise the conduct in question so as to effectively immunise it from breach of the relevant prohibition: see above n 40 and accompanying text.
[66] See TPA ss 45 (horizontal restraints), 47 (non‑price vertical restraints/exclusive dealing), 50 (mergers and acquisitions).
[67] TPA s 45(2) (emphasis added).
[68] TPA s 4F(1).
[69] See, eg, the debate over the distinction between an immediate purpose and an ultimate purpose, as reflected in: News Ltd v South Sydney District Rugby League Football Club Ltd [2003] HCA 45; (2003) 215 CLR 563; NT Power Generation Pty Ltd v Power and Water Authority (2004) 219 CLR 90.
[70] ASX Operations Pty Ltd v Pont Data Australia Pty Ltd [No 1] [1990] FCA 710; (1990) 27 FCR 460. Cf Australian Competition and Consumer Commission v Pauls Ltd (2002) ATPR 41‑911; News Ltd v South Sydney District Rugby League Football Club Ltd [2003] HCA 45; (2003) 215 CLR 563, 584–7 (Gummow J).
[71] See, eg, Dowling v Dalgety Australia Ltd [1992] FCA 35; (1992) 34 FCR 109. Indeed, it has been argued that ‘purpose’ should be given primacy in competition law because it ‘provides one of the best indications of the likely effect’ of an arrangement between competitors: Donald Robertson, ‘The Primacy of “Purpose” in Competition Law — Part 1’ (2001) 9 Competition & Consumer Law Journal 1.
[72] This approach is authorised specifically in the context of having to prove a proscribed purpose in order to establish a misuse of power in a market under s 46(1) of the TPA: at s 46(7).
[73] See Australian Competition and Consumer Commission v Anglo Estates Pty Ltd (2005) ATPR 42‑044, where French J was prepared to exercise the power in dispensing with the penalty against an individual respondent who was found to have acted honestly in reliance on erroneous legal advice which caused him to believe that his conduct would not contravene the TPA, and who was of advanced age, suffering a serious cancer and of limited income.
[74] This list reflects the OECD definition of ‘hard core’ collusive practices: see Recommendation of the Council, above n 9.
[76] See Criminal Code Act 1995 (Cth) s 3.1(1).
[77] See Criminal Code Act 1995 (Cth) s 4.1(1)(a). ‘Conduct’ means ‘an act, an omission to perform an act or a state of affairs’: at s 4.1(2).
[78] See Criminal Code Act 1995 (Cth) s 5.6(1).
[80] It is interesting to note, however, that the dishonesty requirement makes the proposed cartel offence similar to the criminal offence of conspiracy to defraud under s 135.4 of the Criminal Code Act 1995 (Cth) sch (‘Criminal Code’). The Serious Fraud Office in the UK recently launched a major prosecution of a price‑fixing cartel for conspiracy to defraud (the cartel offence not having been enacted at the time that the relevant conduct took place), leading to some debate as to whether a wholly new offence is required to deal with such arrangements: see Mark Furse and Susan Nash, ‘A Rose by Any Other Name’ (2006) 156 New Law Journal 780. Cf Sir Jeremy Lever and John Pike, ‘Cartel Agreements, Criminal Conspiracy and the Statutory “Cartel Offence” — Part 1’ (2005) 26 European Competition Law Review 90; Sir Jeremy Lever and John Pike, ‘Cartel Agreements, Criminal Conspiracy and the Statutory “Cartel Offence” — Part 2’ (2005) 26 European Competition Law Review 164, 165–8, in which the differences between the common law conspiracy to defraud offence and the statutory cartel offence are identified. Furthermore, of relevance to this debate is Norris v United States [2007] EWHC 71; [2007] 2 All ER 29, in which it was held that Ian Norris could be extradited to face cartel charges in the US given that there was an equivalent offence at the same time in the UK, namely the common law conspiracy to defraud offence.
[81] See generally H L A Hart, Punishment and Responsibility (1968).
[82] See Robertson, above n 71, and the references cited therein. Robertson also distinguishes ‘purpose’ in the competition law context from motive and knowledge of consequences: at 18–21.
[83] Under the Criminal Code Act 1995 (Cth) s 5.2(1): ‘A person has intention with respect to conduct if he or she means to engage in that conduct’.
[84] Parker v The Queen [1963] HCA 14; (1963) 111 CLR 610, 632–3 (Dixon CJ).
[85] Martin v Osborne [1936] HCA 23; (1936) 55 CLR 367, 375 (Dixon J).
[86] See Gerakiteys v The Queen [1984] HCA 8; (1984) 153 CLR 317. Cf the approach under Criminal Code s 11.5.
[87] Under the civil regime, in relation to the purpose of exclusionary provisions under TPA s 4D, there is conflicting authority as to whether commonality of purpose is required: see Carlton & United Breweries (NSW) Pty Ltd v Bond Brewing New South Wales Ltd (1987) 16 FCR 351, 356 (Wilcox J); cf ASX Operations Pty Ltd v Pont Data Australia Pty Ltd [No 1] [1990] FCA 710; (1990) 27 FCR 460, 477 (Lockhart, Gummow and von Doussa JJ). See also Seven Network Ltd v News Ltd [2007] FCA 1062; (2007) ATPR (Digest) 46-274, 54 677 (Sackville J), which offers a further permutation.
[88] See Criminal Code Act 1995 (Cth) s 4.1(b).
[89] See Criminal Code Act 1995 (Cth) s 5.6(1).
[91] See Fisse, ‘The Australian Cartel Criminalisation Proposals: An Overview and Critique’, above n 60, 65–6.
[92] See Fisse, ‘The Cartel Offence: Dishonesty?’, above n 52, 272–3.
[93] Ibid. Note, however, the risk of competitors creating ‘sham’ joint ventures to escape criminal liability: see Fisse, ‘The Australian Cartel Criminalisation Proposals: An Overview and Critique’, above n 60, 66.
[94] Submission to the Trade Practices Act Review Committee, 24 July 2002, Submission No 138 (Business Law Committee, Law Council of Australia).
[95] Fisse, ‘The Cartel Offence: Dishonesty?’, above n 52, 272–3, indicating that this is a version of a defence suggested by the ACCC to the Dawson Committee — the ACCC having suggested that ‘cartel behaviour should only be a criminal offence where the accused knew that the conduct was in breach of, or was likely to be in breach of, the law’: Trade Practices Act Review Committee, above n 11, 156.
[96] Fisse, ‘The Cartel Offence: Dishonesty?’, above n 52, 272–3.
[97] See ibid.
[98] This has been provided for in the proposed public MOU between the ACCC and the DPP and is discussed in Part IV below. See Costello, above n 1.
[99] In an attachment to a subsequent submission to the Dawson Committee by the ACCC, entitled ‘Outline of Proposed Memorandum of Understanding between the Director of Public Prosecutions and the Australian Competition and Consumer Commission’, some such additional criteria were identified as follows:
Is there evidence that those involved thought the conduct was dishonest? Do the participants have a history of involvement in cartels? Is there clear evidence that the defendants were not aware of or did not appreciate the consequences of their conduct? Is there evidence that the participants knew that their conduct was illegal but decided to proceed to engage in that conduct? Is there any evidence of coercion?
These criteria were not mentioned in the Treasurer’s press release and the status of this document is unclear. It was released to Brent Fisse in response to a request for access under the Freedom of Information Act 1982 (Cth): see Brent Fisse, ACCC Supplementary Submissions to Dawson Committee Released by the ACCC after FOI Application by Brent Fisse and Lexpert Publications Pty Ltd (9 October 2007) Brent Fisse Lawyers <http://www.brentfisse.com/images/
AcccsupplementarysubmissionstoDawsonCommittee2002.pdf>. The additional criteria are also not included in the draft MOU that was released on 11 January 2008.
[100] See Antitrust Division, Department of Justice, United States, Antitrust Division Manual (3rd ed, 1998) ch III pt C(5) <http://www.usdoj.gov/atr/foia/divisionmanual/table_of_contents.htm> .
[101] Ibid. For an explanation of the origins of this approach: see Donald I Baker, ‘To Indict or Not to Indict: Prosecutorial Discretion in Sherman Act Enforcement’ (1978) 63 Cornell Law Review 405.
[102] Green, Lying, Cheating, and Stealing, above n 22, 34.
[103] Ibid.
[104] Ibid.
[105] Green, ‘Why It’s a Crime to Tear the Tag off a Mattress’, above n 20, 1549–50.
[106] Ibid 1549.
[107] Ibid.
[108] Green, Lying, Cheating, and Stealing, above n 22, 35–8.
[109] As a result, courts have tended to relieve parties of the need to produce evidence measuring cartel harms for the purposes of setting appropriate penalties and have often relied on the value of the commerce affected by the conduct as a proxy for the losses associated with anti‑competitive conduct: see, eg, Australian Competition and Consumer Commission v SIP Australia Pty Ltd (2003) ATPR 41‑937, 47 071 (Goldberg J); Australian Competition and Consumer Commission v Tyco Australia Pty Ltd (2000) ATPR 41‑740, 40 573 (Drummond J); Australian Competition and Consumer Commission v ABB Transmission & Distribution Ltd [No 2] [2002] FCA 559; (2002) 190 ALR 169, 178–9 (Finkelstein J). For discussion of the issues involved in proving the damage caused by cartel activity: see David K Round, ‘Consumer Protection: At the Merci of the Market for Damages’ (2003) 10 Competition & Consumer Law Journal 231.
[110] See Costello, above n 1. See also Department of Trade and Industry, United Kingdom, White Paper, Productivity and Enterprise: A World Class Competition Regime, Cm 5233 (2001).
[111] In economic terms, the damage caused by cartels is generally explained in terms of their impact on efficiencies. For an explanation of this: see Competition Committee, Directorate for Financial, Fiscal and Enterprise Affairs, Report on the Nature and Impact of Hard Core Cartels and Sanctions against Cartels under National Competition Laws, 2, OECD Doc DAFFE/COMP(2002)7 (2002) <http://www.oecd.org/dataoecd/16/20/2081831.pdf> .
[112] Ibid.
[113] Mark A Cohen and David T Scheffman, ‘The Antitrust Sentencing Guideline: Is the Punishment Worth the Costs?’ (1989) 27 American Criminal Law Review 331, 335.
[114] John M Connor and Robert H Lande, ‘How High Do Cartels Raise Prices? Implications for Optimal Cartel Fines’ (2005) 80 Tulane Law Review 513, 559 (citations omitted): ‘Our primary finding is that the median cartel overcharge for all types of cartels over all time periods has been 25%: 17–19% for domestic cartels and 30–33% for international cartels.’ See also Competition Committee, above n 111, finding from a more limited survey of 14 cases a median mark‑up of between 15 and 20 per cent: at 9.
[115] The ACCC proposed that the mechanism used to limit the cartel offence to large corporations would involve the application of size criteria. Thus, it was submitted that only companies satisfying two of the following criteria would be liable for criminal penalties: (1) gross revenue in excess of $100 million; (2) gross asset value in excess of $30 million; or (3) more than 1000 employees: see ACCC, above n 49, 41.
[116] Ibid.
[117] See, eg, Submission to the Trade Practices Act Review Committee, 9 July 2002, Submission No 71 (Business Council of Australia); Submission to the Trade Practices Act Review Committee, 15 July 2002, Submission No 104 (Australian Chamber of Commerce and Industry); Business Law Committee, above n 94.
[118] Trade Practices Act Review Committee, above n 11, 149. This subsequent submission was not made public at the time but has since been released in response to a request under the Freedom of Information Act 1982 (Cth) by Brent Fisse: see Brent Fisse, ACCC Supplementary Submissions to Dawson Committee, above n 99. Notably, while conceding the appropriateness of universal criminalisation, the ACCC nevertheless sought differential treatment of corporations depending on their size, observing:
If a cartel involving small companies had only a limited impact on the economy, it would be expected that a judge would exercise his/her discretion to impose penalties at the lower end of the possible range. In practice, this may rule out imprisonment for those involved in small businesses.
[119] See Costello, above n 1.
[120] Ibid.
[121] Ibid: ‘For bid rigging cases, the value of the successful bid or series of bids would need to exceed $1 million within a 12‑month period’.
[122] Memorandum of Understanding between the Office of Fair Trading and the Director of the Serious Fraud Office, October 2003, OFT 547, 5. The other listed criteria are:
• Is the case likely to give rise to national publicity and widespread public concern?
• Does the case require highly specialist knowledge of, for example, stock exchange procedures or regulated markets?
• Is there a significant international dimension?
• Will legal, accountancy and investigative skills need to be brought together?
• Is there a need to use the SFO’s special powers?
[123] Ibid.
[124] Antitrust Division, above n 100, ch III pt B(1). The other two factors are: (1) whether the allegations or suspicions of a criminal violation are sufficiently credible or plausible to call for a criminal investigation; and (2) what resources will be required to investigate and prosecute the matter.
[125] Ibid. Reflecting the focus in the US on the moral wrongfulness of cartel activity (discussed further below), the policy places particular emphasis on the last of these factors, describing it as having the potential to ‘trump’ all of the others on the grounds that it is the ‘Division’s mission … to seek redress for any criminal antitrust conspiracy that victimizes the federal government and, therefore, injures American taxpayers’: at ibid.
[126] Fisse, ‘The Cartel Offence: Dishonesty?’, above n 52, 246. The Australian government has rejected this recommendation: Letter from Tony Smith (Parliamentary Secretary to the Prime Minister) to Brent Fisse, 26 February 2007.
[127] Fisse, ‘The Cartel Offence: Dishonesty?’, above n 52, 15–16, 50, 52.
[128] Julie Clarke, ‘Criminal Penalties for Contraventions of Part IV of the Trade Practices Act’ [2005] DeakinLawRw 8; (2005) 10 Deakin Law Review 141, 162.
[129] Ibid.
[130] For the sentencing practice in the US: see United States Sentencing Commission, Guidelines Manual (2005) §2R1.1, which sets the base fine for corporations in respect of specific antitrust law offences (bid‑rigging, price‑fixing and market allocation agreements) as ‘20 percent of the volume of affected commerce.’ For the sentencing practice of the European Commission: see Guidelines on the Method of Setting Fines Imposed Pursuant to Article 23(2)(a) of Regulation No 1/2003 [2006] OJ C 210/2; Christopher Harding, ‘Business Cartels as Criminal Activity: Reconciling North American and European Models of Regulation’ (2002) 9 Maastricht Journal of European and Comparative Law 393, 411–12; Wouter P J Wils, ‘The European Commission’s 2006 Guidelines on Antitrust Fines: A Legal and Economic Analysis’ (2007) 30 World Competition 197.
[131] As previously indicated, the proposed requirement is in fact that the defendant had the intention of ‘dishonestly obtaining a gain’. The dishonesty aspect of this requirement is discussed below in Part V.
[132] Fisse, ‘The Cartel Offence: Dishonesty?’, above n 52, 242–4. Similarly, the proposed offence appears to catch the mere making of an agreement and hence situations in which no harm has been caused would come within its purview (theoretically at least). This tends to undermine the argument that the conduct to be criminalised is morally reprehensible, unless one takes the view that the agreement in itself is reprehensible (along the lines of Harding’s argument: see below Part V).
[133] Clarke, above n 128, 160. It is true that such an intention in fact would fall within the proposed element as described in the then Treasurer’s press release which referred to a ‘pecuniary or non‑pecuniary gain, either for the defendant or for another person’: see Costello, above n 1 (emphasis added). However, criminalisation of an intention to save workers’ jobs would seem to be an unintended (pardon the pun) result.
[134] Clarke, above n 128, 160–1. For reference to the cases in which this distinction has been shown to be problematic in construing the requisite anti‑competitive purpose under the civil prohibition: see above n 69.
[135] Fisse, ‘The Cartel Offence: Dishonesty?’, above n 52, 243, citing Williams, above n 12.
[136] Ibid. For further analysis of the range of collaborative arrangements between competitors that may or may not have anti-competitive effects: see Andrew Harpham, Donald Robertson and Philip Williams, ‘The Competition Law Analysis of Collaborative Structures’ (2006) 34 Australian Business Law Review 399.
[137] Green, Lying, Cheating, and Stealing, above n 22, 39.
[138] Ibid.
[139] Ibid.
[140] In terms of mens rea, the wrongfulness of an act may depend upon whether or not it is intentional. However, an act can also be wrongful even when the defendant is not culpable, for example, where the defendant has an excuse recognised by the law. Similarly, while morally wrongful acts frequently cause or risk causing harm, they need not necessarily do so. For example, cheating or lying, of particular significance for present purposes (as explained below), is wrongful but may not cause any harm to others: see Green, ‘Why It’s a Crime to Tear the Tag off a Mattress’, above n 20, 1552.
[141] It is this difficulty that has led many theorists to criticise the use of criminal sanctions in relation to economic activity, arguing that in the absence of clear moral wrongfulness, the harmfulness of certain business activities is not sufficient to justify their criminalisation: see Green, ‘Why It’s a Crime to Tear the Tag off a Mattress’, above n 20, 1561–2 fnn 82–93. See also Kadish, above n 19, 425–6: since the unlawful conduct ‘is not criminal under traditional categories of crime and … closely resembles aggressive business behavior, the stigma of moral reprehensibility does not naturally associate itself with the regulated conduct.’
[142] Green, Lying, Cheating, and Stealing, above n 22, 40. Indeed this was the very point made by Mason CJ and Wilson J in Queensland Wire Industries Pty Ltd v Broken Hill Pty Co Ltd [1989] HCA 6; (1989) 167 CLR 177, 191: ‘Competition by its very nature is deliberate and ruthless. Competitors jockey for sales, the more effective competitors injuring the less effective competitors by taking sales away.’
[143] Queensland Wire Industries Pty Ltd v Broken Hill Pty Co Ltd [1989] HCA 6; (1989) 167 CLR 177.
[144] Maureen Brunt, ‘“Market Definition” Issues in Australian and New Zealand Trade Practices Litigation’ (1990) Australian Business Law Review 86, 88–9.
[145] Queensland Wire Industries Pty Ltd v Broken Hill Pty Co Ltd [1989] HCA 6; (1989) 167 CLR 177, 194.
[146] See Williams, above n 12, 1; Bill Reid and Elizabeth Henderson, ‘Cartels — Criminal Sanctions and Immunity Policy’ (2006) 14 Trade Practices Law Journal 199, 202.
[147] Fels, above n 45; ACCC, above n 49, 20.
[148] See above n 147.
[150] Enterprise Act 2002 (UK) c 40, s 188(1): ‘An individual is guilty of an offence if he dishonestly agrees with one or more other persons to make or implement, or to cause to be made or implemented, arrangements of the following kind relating to at least two undertakings (A and B).’ Section 188(2) then sets out six categories of arrangement (consistent with the OECD definition) that if implemented, will be deemed to fall within the terms of the offence.
[151] See Sir Anthony Hammond and Roy Penrose, Proposed Criminalisation of Cartels in the UK: A Report Prepared for the Office of Fair Trading (2001) 10.
[152] This submission was not made public at the time but was referred to in the report of the Dawson Committee: see Trade Practices Act Review Committee, above n 11, 155. It has since become available, however: see above n 99.
[153] The ACCC took the view in its later submission that it would be necessary to incorporate a requirement of dishonesty in the offence so as to ensure that arrangements, such as those entered into by the banks that set credit charge interchange fees (which the ACCC argues amounts to price‑fixing), are not treated as criminal offences: see ibid. This argument, according to Fisse, is ‘sheer nonsense’ — ‘if the cartel offence should not apply to cases where the cartel conduct has effects only in downstream markets then the appropriate mechanism is an exemption drafted simply in those terms’: see Fisse, above n 99.
[154] The alternative was that the mental element be formulated to require that the defendant knew that the conduct breached or was likely to breach cartel laws. This alternative was not attractive to the Dawson Committee, perhaps understandably given it runs counter to the general principle that ignorance is no excuse. See also ibid.
[155] Submission to the Working Party on Penalties for Cartel Behaviour, Department of the Treasury, 12 December 2003 (Trade Practices Committee, Business Law Section, Law Council of Australia).
[156] Clarke, above n 128, 159 (citations omitted). See also Castle and Writer, above n 11, 8–10, 13.
[158] Dishonesty is not an element of the offence in any other jurisdiction that has criminal cartel laws and was not identified by the OECD in its definition of the conduct warranting tougher enforcement and deterrence measures: Recommendation of the Council, above n 9. Notably, even the Commonwealth DPP has been reported as having advised the government against the dishonesty proposal: see ‘Regulator to Tap Phones in Cartels Blitz’, The Australian Financial Review (Melbourne), 24 October 2007, 1, 4.
[159] This test was articulated by the English Court of Appeal in R v Ghosh [1982] EWCA Crim 2; [1982] QB 1053 and has been codified in s 130.3 of the Criminal Code.
[160] Fisse, ‘The Cartel Offence: Dishonesty?’, above n 52, 255–7, citing The Law Commission, England and Wales, Legislating the Criminal Code: Fraud and Deception, Consultation Paper No 155 (1999). But see D W Elliott, ‘Dishonesty in Theft: A Dispensable Concept’ [1982] Criminal Law Review 395; Andrew Halpin, ‘The Test for Dishonesty’ [1996] Criminal Law Review 283. Cf Gary Scanlan, ‘Dishonesty in Corporate Offences: A Need for Reform?’ (2002) 23 The Company Lawyer 114, which expresses support for the dishonesty test.
[161] Fisse, ‘The Cartel Offence: Dishonesty?’, above n 52, 33, 38, citing Edward Griew, ‘Dishonesty: Objections to Feely and Ghosh’ [1985] Criminal Law Review 341, 345; Oliver Black, Conceptual Foundations of Antitrust (2005) 128. The counter‑argument is that dishonesty is a well‑established concept in the criminal law and is widely used in other white‑collar criminal offences including under the corporations law and in the fraud context: see Costello, above n 1; Clarke, above n 128, 160.
[162] Fisse, ‘The Cartel Offence: Dishonesty?’, above n 52, 249. This point has also been made by other commentators: see, eg, Reid and Henderson, above n 146, 207. Fisse’s concerns appear supported by the findings of a recent British survey in which only 63 per cent (six in 10 Britons) were reported to believe that price‑fixing is dishonest. This is a surprising finding given that a majority of respondents (73 per cent) recognised that price‑fixing is harmful and considered that it should be punished: see Andreas Stephan, ‘Survey of Public Attitudes to Price‑Fixing and Cartel Enforcement in Britain’ (CCP Working Paper 07‑12, ESRC Centre for Competition Policy & Norwich Law School, University of East Anglia, 2007) 3.
[163] A criticism which, he notes, has also been made in the context of property offences: Fisse, ‘The Cartel Offence: Dishonesty?’, above n 52, 262.
[164] A description in fact coined by Harding and Joshua, who raised concerns similar to those expressed by Fisse in relation to the adoption of a dishonesty element in the new UK offence: Christopher Harding and Julian Joshua, ‘Breaking Up the Hard Core: the Prospects for the Proposed Cartel Offence’ [2002] Criminal Law Review 933, 938; see below n 166 and accompanying text.
[165] Fisse, ‘The Cartel Offence: Dishonesty?’, above n 52, 265–6. Furthermore, Fisse criticises the ‘inegalitarian bias’ likely to be introduced to this area of the law by the ‘gift’ that the subjective limb of the Ghosh test would present to ‘smart, well resourced corporate defendants’: at 44–5.
[166] Harding and Joshua, above n 164, 937–8. See also George Peretz and James Lewis, ‘Go Directly to Jail: Losing Badly in “Monopoly”’ (2003) New Law Journal 99.
[167] Failure to do so, Harding argues, is likely in the long run to impair support for the new law from key stakeholders and, ultimately, undermine its effectiveness: Harding, ‘Business Collusion as a Criminological Phenomenon’, above n 5, 183. See also Stucke, above n 14.
[168] This flows in part from the wording of § 1 of the Sherman Act, 15 USC §§ 1–7 (2000 & Supp IV, 2004), which declares illegal ‘[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations’ and in part from the way in which it has been interpreted by the courts: see Harding, ‘Business Cartels as Criminal Activity’, above n 130, 410. See also Stucke, above n 14, 503.
[169] Harding, ‘Business Cartels as Criminal Activity’, above n 130, 412.
[170] Ibid 410–12.
[171] Christopher Harding, ‘Forging the European Cartel Offence: The Supranational Regulation of Business Conspiracy’ (2004) 12 European Journal of Crime, Criminal Law and Criminal Justice 275, 284–5.
[172] Ibid.
[173] Ibid. Harding does acknowledge, however, that if this ‘idea of contumacious, arrogant and furtive business conspiracy’ is to supply the culpability necessary for criminal law purposes, the difficulty becomes how to cast it effectively in legal language for the purposes of encouraging prosecution and securing conviction: see Harding, ‘Business Collusion as a Criminological Phenomenon’, above n 5, 200–1. He also acknowledges that for English criminal law, ‘the concept of conspiracy raises some particular problems relating to the reluctance to make criminal an agreement to do something which is not criminal (for instance, price‑fixing, not in itself a criminal act)’: see Harding, ‘Business Cartels as Criminal Activity’, above n 130, 418. Presumably, the same issue would arise in the Australian context: see Criminal Code s 11.5.
[174] See above Part I.
[175] This paradigm is explained in Green, Lying, Cheating, and Stealing, above n 22, 56–66. See also Stucke, above n 14, arguing that antitrust ‘is grounded in the moral norm of fairness’ (at 495) and observing that ‘[t]he attainment of material prosperity by unfairly disadvantaging others has long been censored’: at 498.
[176] Green, Lying, Cheating, and Stealing, above n 22, 58.
[177] Ibid 58–62.
[178] Ibid 63. Admittedly though, it may be subject to justified exceptions as in the case of arrangements between competitors that may be authorised on the grounds of public benefit and the case of collective bargaining by small firms, in particular: see above nn 40–1 and accompanying text.
[179] Ibid 64.
[180] Ibid 57, 65–6.
[181] Ibid 64.
[182] There is, however, voluminous economic literature on such matters: see, eg, Alexis Jacquemin and Margaret E Slade, ‘Cartels, Collusion, and Horizontal Mergers’, in Richard Schmalensee and Robert D Willig (eds), Handbook of Industrial Organization (1989) vol 1, 415; David K Round and John J Siegfried, ‘Horizontal Price Agreements in Australian Antitrust: Combatting Anti‑Competitive Corporate Conspiracies of Complicity and Connivance’ (1994) 9 Review of Industrial Organization 569.
[183] As explained in Green, Lying, Cheating, and Stealing, above n 22, 76–87. This norm could apply equally to a market‑sharing, output restriction or bid‑rigging arrangement.
[184] Ibid 76. Green distinguishes between lying and misleading, making it clear that the former (for which much stricter conditions must be met) is not necessary in order to establish deception.
[185] Notably, deception along these lines is referred to in the then Treasurer’s press release in justifying the incorporation of dishonesty as an element of the new offence: ‘Dishonesty goes to the heart of serious cartel conduct, where customers are deceived when purchasing goods or services, unaware that the price and supply of those goods and services were determined by collusion, rather than competition’: Costello, above n 1.
[186] In situations where tenderers have signed up to protocols forbidding bid‑rigging activity (as is increasingly common in relation to government outsourcing), such conduct could also constitute a breach of Green’s moral concept of promise‑breaking: see Green, Lying, Cheating, and Stealing, above n 22, 107–13.
[187] This has been so despite the fact that, in its submission to the Dawson Committee, the ACCC gave as one of its reasons for initially rejecting the incorporation of dishonesty as an element of the new offence, the contrast between cartel activity and theft: ‘A person can acquire property with a number of different intentions, but it is dishonesty that makes them criminal — whereas there is unlikely to be an honest reason for entry into a cartel arrangement’: ACCC, above n 49, 46. Notwithstanding this qualification, in subsequent public statements by the Chairman of the ACCC, the analogy with theft re‑emerged: see, eg, Graeme Samuel, ‘The Enforcement Priorities of the ACCC’ (Speech delivered at the Competition Law Conference, 12 November 2005) 11: ‘I make no apology for describing cartels as a form of theft’.
[188] Green, Lying, Cheating, and Stealing, above n 22, 88.
[189] Ibid 89–91.
[190] It could apply equally, albeit less directly, to a market division, output restriction or bid‑rigging arrangement.
[191] See generally Connor and Lande, above n 114. For a recent illustration of the nature of the econometric evidence required for this purpose: see Darwalla Milling Co Pty Ltd v F Hoffman‑La Roche Ltd [No 2] (2007) ATPR 42‑134.
[192] An apt description given the ACCC Chairman’s recent denunciation of cartel participants as ‘well‑dressed thieves’: ‘Cartel Ringleaders Are Well‑Dressed Criminals, So Why Not Send Them to Jail’, The Age (Melbourne), 3 November 2007, BusinessDay 2.
[193] For a list of the immediate steps that should be taken in this regard, see Christopher Hodgekiss, ‘Commentary on Paper by Caron Beaton‑Wells: “Criminalising Cartels: A Slow Conversion?”’ (Commentary delivered at the Fifth Annual University of South Australia Trade Practices Workshop, Rowland Flat, 19 October 2007).
[194] Preferably beyond the general statement in the Prosecution Policy of the Commonwealth: Guidelines for the Making of Decisions in the Prosecution Process (2nd ed, 1990) [2.10] that ‘factors which may arise for consideration in determining whether the public interest requires a prosecution include: … (f) the degree of culpability of the alleged offender in connection with the offence’.
[195] Mirroring the practice in the US of not prosecuting those who were not aware of, or did not appreciate the consequences of, their actions: see above n 101 and accompanying text.
[196] See Kenneth Mann, Defending White‑Collar Crime: A Portrait of Attorneys at Work (1985).
[197] See above n 30 and accompanying text. In respect of corporations especially, such sanctions should not be confined to criminal conviction and fines. Indeed fines may not be a strong vehicle for projecting or communicating the moral wrongfulness of serious cartel conduct as they are essentially a pricing mechanism. In order to reflect the undesirable dimension of an offence, sanctions against corporations that have expressive capability are required — for example, punitive adverse publicity orders (for which there is already provision in TPA s 86D); punitive community service orders (see TPA s 86C) and punitive injunctions. See, eg, Australian Law Reform Commission, Principled Regulation, Report No 95 (2002) ch 28; Brent Fisse, ‘Reconstructing Corporate Criminal Law: Deterrence, Retribution, Fault and Sanctions’ (1983) 56 Southern California Law Review 1145.
[198] Ball and Friedman, above n 21.
[199] See, eg, Thomas O Barnett, ‘Seven Steps to Better Cartel Enforcement’ (Paper presented at the 11th Annual Competition Law and Policy Workshop, European Union Institute, Florence, 2 June 2006).
[200] For further discussion of some of these challenges: see Beaton‑Wells, ‘Criminalising Cartels: A Slow Conversion?’, above n 32.