Cartel conduct laws passed - criminal penalties now law

The amendment to the Trade Practices Act to introduce criminal penalties (including up to 10 years jail) for cartel conduct has been passed by Parliament. The main provisions commence on 24 July 2009.

If an organisation enters into a contract, arrangement or understanding that contains a cartel provision or gives effect to a cartel provision, penalties of the greater of $10 million, three time the total value of the benefit obtained and 10% of the corporate group's annual revenue can apply to the organisation. For individuals knowingly concerned, the penalties can be criminal (with a fine up to $220,000 per offence, up to 10 years jail and a criminal conviction) or there can be a civil liability of $500,000 per offence.

Organisations should now review their trade practices compliance programs to reflect these changes to the law.

Organisations should also consider reviewing the following for compliance with the new laws:

• joint ventures with competitors (in particular joint ventures that do not involve production and/or supply of goods and services - these would include research based joint ventures, exploration joint ventures and joint ventures for the joint acquisition of goods or services);
• supply arrangements between competitors; and
• joint marketing or promotional arrangements (such as those common within banner groups and franchises).

It could be necessary or desirable to obtain an authorisation where the conduct offends the new provisions. The ACCC has advised that any such cartel conduct discovered will be prosecuted and jail terms for executives will be sought.

If such conduct is currently occurring, legal advice should be sought in relation to the ACCC immunity and leniency policy which, when available, provides full immunity from prosecution and penalties for the first eligible cartel participant to report the existence of the cartel and cooperate with the ACCC prosecution of the other cartel participants.

Mills Oakley Lawyers franchise consultants provide franchise legal advice for franchisees and franchisors