Jail penalties for cartel conduct

Draft laws to make business owners and managers who engage in serious cartel conduct vulnerable to jail sentences were released by Assistant Treasurer Chris Bowen on Friday.

Individuals who commit the criminal offence of serious cartel conduct will face jail terms of up to five years and fines of up to $220,000 per offence.

Penalties of up to $10 million per offence, 10% of turnover or three times the value of any unfair benefit obtained, which already exist in the Trade Practices Act, will apply to businesses involved in cartel activity.

The draft legislation would also create a dedicated civil offence of cartel behaviour that would expose individuals to fines of up to $500,000.

Calls to increase penalties to include jail terms for individuals engaged in cartel conduct increased after Visy chairman Richard Pratt was fined $36 million for his part in cartel arrangements with Amcor, a penalty many considered insufficient given his billion-dollar personal wealth.

The draft legislation proposes creating two new criminal offences, one for a person who forms a cartel arrangement with the intention of dishonestly obtaining a benefit and one for a person who gives effect to such an arrangement.

“The Government intends to criminalise serious cartel conduct to send a very clear message to the business people who engage in such behaviour. Cartel activity is theft; it’s a form of stealing from consumers,” Bowen says.

“While these reforms are a vital step in promoting competitive markets they also provide important protection for small businesses and consumers who are often the ones who bear the cost of cartel conduct,” he says.