Cartel Confessions: the latest Cartel Immunity Policy commences

In brief 3 min read

On 1 October 2019, the ACCC's new Cartel Immunity and Cooperation Policy came into effect. The revised policy now excludes concerted practices and requires a higher level of cooperation from parties seeking to obtain cartel immunity, including a number of conditions an applicant must meet before immunity is granted.

Key takeaways

• The revised policy does not cover anti-competitive concerted practices.
• Applicants will need to satisfy a number of conditions before cartel immunity is granted under the new policy, which include providing the ACCC with a signed cooperation agreement early in the immunity process, complying with a timetable for assistance and providing a written compliance certificate at the end of the evidence-gathering phase.
• The ACCC has launched an anonymous online portal for whistleblowers.

Background

Under the ACCC's Cartel Immunity and Cooperation Policy, corporations or individuals may seek civil and criminal immunity for cartel conduct by applying to the ACCC. The ACCC is responsible for granting civil immunity, whilst the Commonwealth Director of Public Prosecutions is responsible for granting criminal immunity.

The immunity policy is designed to provide incentives to the first party to disclose cartel conduct which otherwise would be highly secretive and difficult to discover. This policy provides both incentives (such as avoiding potential jail time) and substantial penalties for eligible corporations or individuals. It was designed to destabilise cartels by encouraging participants to break the secret pact and jump overboard, famously stated to be 'like rats leaving a sinking ship.'

When landing the updated policy, ACCC Chair Rod Sims said:

the immunity policy is one of our key strategies for detecting and dismantling cartels. We have been able to undertake numerous in-depth cartel investigations as a result of immunity applications under our policy.

Since its introduction in 2003, the Cartel Immunity and Cooperation Policy has proved highly effective in providing the ACCC with information and assistance in its endeavours to 'crack cartels' that are often secretive in nature.

What has changed?

The ACCC has strengthened its approach to applications for immunity from prosecutions of cartel conduct such as price fixing, market sharing, bid rigging and customer allocation. Following concerns about the breadth of cooperation required and uncertainty surrounding the process, the new immunity policy seeks to enhance transparency around what is required through a signed cooperation agreement.

Key changes to the policy include:

1. The ACCC has narrowed the scope of the immunity policy. It will only apply to cartel conduct and expressly excludes all other forms of anti-competitive arrangements, including concerted practices. As the ACCC states in its revised policy:
   

   If the ACCC forms the view that the conduct reported by an applicant seeking immunity under this Policy is not cartel conduct, but may comprise an anti-competitive concerted practice, conditional immunity will not be granted.

   That said, parties can still seek some leniency through the cooperation policy.
2. As a means of providing more certainty, applicants will now be asked to enter into a signed 'cooperation agreement' to be eligible for conditional immunity. This agreement sets out a timetable for the initial cooperative steps the applicant agrees to undertake to satisfy its obligations of providing evidence and assistance under the immunity policy. A template of this 'cooperation agreement' can be found here. The applicant's immunity will be conditional upon continuing to satisfy its obligations under this agreement. Notably, the ACCC may set out, in writing, additional requirements for cooperation from time to time, which cuts across the certainty to some degree.
3. At the end of the ACCC's evidence-gathering stage, the onus is on the immunity applicant to provide a certificate in writing that it has fully complied with its obligations under the immunity policy. These obligations include:
• having conducted all reasonable searches; an
• having provided all relevant witnesses, information and documents to the ACCC that are within the applicant's power, custody or control.
4. Use of information by the ACCC. In circumstances where a marker lapses or is withdrawn, conditional immunity is not granted or a marker is otherwise cancelled, the ACCC may use information provided by an immunity applicant and any derivative applicants indirectly to further an investigation into any civil or criminal breaches of the CCA. However, if conditional immunity has been granted, but is then revoked because of a failure to comply with the conditions of immunity, the ACCC may use information provided by an immunity applicant and any derivative applicants in any civil or criminal proceedings for breaches of the CCA.
5. Eligibility for immunity will generally not be available for unilateral attempts by corporations or individuals to engage in cartel conduct. However, individuals involved in unsuccessful unilateral attempts to participate in a cartel may be eligible for immunity if they are able to provide information about their current or former employer attempting to induce a competitor to form a cartel.
6. New anonymous reporting tool for whistleblowers. There are still concerns over whistleblower protection for individuals in Australia. The ACCC has launched a new and completely anonymous way for individuals to report cartel conduct. This is through an anonymous online portal which encrypts the information and removes the individual's IP address, so their identity remains anonymous even to the ACCC. These individuals can then log back onto the portal and continue to communicate anonymously with the ACCC's investigators. Whether this reporting tool provides useful information or will just be an avenue for disaffected employees or competitor complaints will remain to be seen.

The policy applies to international cartels that affect Australia in the same way as it applies to domestic cartels. Potential immunity applicants or cooperating parties involved in an international cartel affecting Australia should have regard to the following matters:

• an immunity application made, or cooperation provided, to a foreign competition enforcement agency will not be considered an application in Australia under the Policy. This means an immunity applicant should contact the ACCC at the same time it contacts other jurisdictions; and
• the ACCC will actively assess and, if appropriate, investigate and take enforcement action in relation to international cartels that have a connection to, or cause detriment in, Australia.

Next steps

• If you stumble onto conduct that may amount to cartel conduct, don't delay in considering the Cartel Immunity and Cooperation Policy. Remember, there may be 'a race to the confessional' and you will want to get there first.