Monday 19th Nov, 2018

NYK conviction reflects “cartel focus”, says Sims

ACCC chairman Rod Sims. ACCC
ACCC chairman Rod Sims. ACCC

AUSTRALIAN Competition and Consumer Commission chair, Rod Sims, has hailed the conviction Japanese liner NYK as vindication of increased resources towards cartel investigations.

For the first time in more than a century in Australia, a cartelist was last week convicted, sentenced and fined $25m for a breach of criminal law.

It is the second largest fine imposed under the Competition and Consumer Act (2010).

Speaking at the Law Council of Australia Competition and Consumer Committee Workshop in Melbourne, Mr Rod Sims said the verdict “vindicates the increased dedicated resources the ACCC has allocated over the past three years to cartel investigations”.

“We have built a substantial team of specialist criminal cartel investigators. This has been a huge investment by the ACCC. We now have a strong capacity to conduct careful and thorough criminal investigations,” Mr Sims said.

“As a consequence, we have provided briefs of evidence to the Commonwealth Director of Public Prosecutions (CDPP) on a number of cartel-related matters. We look forward to the CDPP assessing and determining whether there is a basis for commencing prosecutions against any of the parties we have identified.”

“To put all this another way, our criminal cartel machine is now built, and running at its appropriate capacity. You will now see its continuing output.”

Mr Sims outlined a more intensive information-gathering approach which the ACCC is to adopt when reviewing merger proposals.  Mr Sims said during the past six years, the public review of mergers had become increasingly more complex and contentious.

“Mergers that present significant and clear competition concerns are more likely to be resolved either by the parties negotiating a remedy or making the decision to abandon the transaction. In the last financial year, there were two mergers cleared subject to remedies and eight were withdrawn following the ACCC releasing a statement of issues. It is the more marginal cases that present the greatest challenge for the ACCC and the ones that are most likely to end up being litigated,” Mr Sims said.

“Criticisms directed to the ACCC’s approach in these cases were that we were being too theoretical and lacking in commercial reality. In these cases, we considered that the merged entity would have the ability and incentive post acquisition to raise prices and lower service, and that therefore they would act rationally.”

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