Trade Practices News March 2009

Cartels: Price-fixing and exclusionary commercial arrangements to attract even greater penalties for companies

Cartel conduct refers to behaviour which has the purpose or effect of fixing, controlling or maintaining the prices of goods, or of directly or indirectly restricting the production of goods or supply of services generally to exclude or restrict the ability of other companies to trade in the same industry. Such practices have the effect of distorting the market in the target goods or services.

New civil and criminal penalties are to be introduced by the Trade Practices Amendment (Cartel Conduct and other Measures) Bill 2008. This reform will allow for the imprisonment of persons engaging in cartel conduct.

Offences punishable under the provisions of the Trade Practices Act after this amendment will include the making of or giving effect to a cartel provision in a contract or other commercial arrangement.

Directors will only attract sanction under this regime where they have personally aided or otherwise induced cartel behaviour, or have conspired in any way with those responsible.

The first person who has actively participated in cartel conduct to report the cartel to the ACCC will be extended immunity.

Companies and directors should be wary of invitations to join any such cartel conduct, even in times of decreasing profitability, at Forum Law we can advise and assist you if you have any concerns in this area or any other dealings which may impact negatively on the ability of others to trade.