Cartel prosecutions and the struggle to convict – Monash Lens

After more than three years of investigation and prosecution that culminated in a 12-week jury trial, the CDPP v The Country Care Group Pty Ltd case ended this month with acquittals for the named company, as well as its CEO and a former employee.

Failure to obtain a conviction in this case – Australia’s first jury trial and the first contested antitrust case since Australia accepted an antitrust offense in 2009 – is a significant defeat for the ACCC, which investigated the matter and assisted the Commonwealth Attorney General (CDPP ) Expenditure.

Misfires in this closely watched case will tarnish the image of criminal cartel enforcement in Australia to some extent, at least until the ACCC and CDPP achieve more consistent success in this area.

In previous cases in the vehicular shipping space (NYK, K-Line, and Willenius Wilhelmsen Ocean, completed in 2017, 2019, and 2021), authorities managed to enforce guilty pledges and agreed penalties from overseas companies, but those victories will remain cold after comfort the stabbing loss in the Country Care case.

In future antitrust cases, the defeat will certainly stimulate the two authorities to reflect on case selection and to review and review the validity of the evidence they are trying to present in court.

The jury’s unanimous decision to acquit all of the defendants in this case after only four hours of deliberation reflects the difficulty in complex criminal cases where a key prosecutor may be perceived as one of dubious credibility (such as an alleged co-conspirator). ), and when the elements of the case, including an element of error (ie, a cause of “knowledge or belief”) need to be determined beyond doubt.

It cannot be ruled out that the jury’s sympathies could have been an additional factor, as the defendant company in this case was a family business in Mildura in northwest Victoria.

The alleged cartel concerned “assistive technology products” used by the disabled or in rehabilitation and elderly care, including products such as beds and mattresses, wheelchairs, walking aids and other aids.

ACCC and CDPP tried to determine that Country Care and its managing director and a former employee tried from 2014 to 2016 to induce numerous retailers of the “Country Care Group” to commit collusive acts.

Managing Director Robert Hogan was concerned that some retailers were advertising prices below what Country Care charged the Department of Veterans’ Affairs, increasing the risk that the Department would want to renegotiate prices. To avoid this, the managing director allegedly tried to get the company to stop advertising such low prices.

After hearing evidence of the alleged price fixing and bid fixing, the jury acquitted the defendants of all charges.

Hogan wasted no time claiming that the defense fatally discredited the lead witness presented by the CDPP and ACCC who testified in exchange for immunity from prosecution. The witness, said Hogan, was angry and had “a grudge” against him and the company. In addition, the testimony had proven to be unreliable in cross-examination.

In response to the jury’s judgment, the ACCC’s public message was stoic and steadfast. Chairman Rod Sims said in a June 2 media release:

“The ACCC will continue to give high priority to the deterrence, detection and resolution of cartels that have the potential to harm Australian consumers and will take enforcement action when appropriate.”

Australia is one of around 30 countries that have criminalized anti-competitive collusion, despite the United States leading the way with a well-established and indeed feared system of criminal penalties.

In Australia, the parliament decided in 2009 to introduce a criminal system for so-called “hardcore” cartels such as price fixing or market sharing cartels.

Accordingly, Sections 45AF, 45AG and 79 of the Competition and Consumer Act 2010 (Cth) establish criminal cartel offenses on the basis of which both individuals and legal entities can be removed from the ACCC for prosecution by the Commonwealth Director of Public charges.

According to an MOU concluded with the ACCC in 2014, cartel behavior can be referred to the CDPP if it is “serious”, i.e. if there is practically an aggravating factor or if the case is serious due to its extent, reason or harmfulness.

If circumstances do not warrant a referral, the ACCC can enforce the antitrust prohibition as a civil matter (under Sections 45AJ and 45AK of the same Act) and seek a court order for substantial fines, injunctions and other legal remedies.

In civil proceedings – using the example of a pending case against BlueScope Steel and its former employee – the ACCC also benefits from a less incriminating standard of evidence; that is, the balance of probabilities.

The aim of the sanctions is to promote targeted and general deterrence, particularly in criminal matters (which, in contrast to civil cases, can also contain an element of retaliation) and, in the view of the ACCC, also to contribute to the detection of cartels by providing incentives for applications for immunity from sanctions.

A case like Country Care is not followed up without careful consideration. Before an indictment is brought, the indictment policy of the Commonwealth CDPP (in Sections 2.4 to 2.11) requires the CDPP to be satisfied that there is a reasonable prospect of conviction and that prosecution is necessary in the public interest.

However, it is evident that these filters, which appear perfectly reasonable, are no guarantee of how a jury will judge the evidence.

Other cases pending

The Country Care case has been followed closely as several other cartel cases are pending in Australia. Unlike the above cases, some other cases are criminal charges against current and former employees of the company, i.e. against individuals, in addition to the respective company defendants.

A good example – indeed, the elephant in the courtroom throughout the country care process – is a prominent case currently playing out in the international banking sector.

This case relates to a $ 2.5 billion institutional share placement in 2015 by ANZ. The CDPP claims there was collusion in the trading of ANZ shares held by banks other than underwriters, and after a motion for immunity from JP Morgan has indicted ANZ, Citigroup, Deutsche Bank and six “knowingly affected.” “People charged.

The matter has attracted worldwide attention – and whatever the outcome, it is destined to generate sensational media coverage.

In April 2022, a process of at least six months is to begin before the Federal Court of Justice.

Other ongoing criminal cases concern sectors such as construction (steel assembly and scaffolding services), currency exchange (Australia-Vietnam currency pair) and pharmacy (medicines for stomach ache and related diseases).

Now that Country Care’s early “landmark” is complete, at least one important question arises – a question that, given the secrecy of the jury’s deliberations, cannot be answered with certainty.

The question is whether the acquittal in this case:

• is simply due to a perceived lack of credibility on the part of the ACCC’s lead witness, and the difficulty of prosecuting such a case would be no different from those relating to other crimes; or
• is instead a sign that the Australian public still lives in a paradigm where anti-competitive commercial collusion does not justify the stigma of criminal punishment, at least given the dramatic (albeit theoretical) maximum sentence of ten years in prison for individuals and potentially high Corporate fines.

If the latter is the real reason law enforcement fail in Country Care, it may bode well for the few ongoing criminal cases and mean that the time for criminal cartel sanctions in Australia has not yet come.

This would be disappointing given the already significant investment by the ACCC in adapting its capacity, staff and procedures to law enforcement needs.

But these are the proverbial “early days”. Perhaps a jury will be less likely to acquit if the defendants are large corporations or mega-corporations, as opposed to regional family businesses.

Still, it is tempting to assume that the second of the above options may have influenced the jury’s judgment in this case. If so, it would be important to redouble agency public outreach and education efforts to show the public that cartels deserve the same shame as serious financial crimes such as fraud and embezzlement.

The ACCC must work to avoid a situation where the “Law on the Books” provides for harsh criminal law, while in practice the law lapses into dormancy due to the practical difficulties of prosecution and lack of success in high profile cases.