CN03 - Country Care acquitted in Australia first criminal cartel trial
16 September 2021
On 2 June 2021, after a lengthy 12 week trial in the Federal Court of Australia – but only four hours of deliberation – a jury unanimously acquitted Country Care, its managing director and a former employee of all charges in Australia's first contested criminal cartel trial.
Key takeaways
- The ACCC and CDPP have suffered a historic defeat in the first criminal cartel trial in Australia since cartel conduct was criminalised in 2009.
- Even where the accused is vindicated of all charges, the financial and emotional toll on individuals and companies involved in criminal cartel cases is substantial, particularly as there is no recovery of costs even if the accused succeed – as Country Care did – in being acquitted on all charges.
- Despite the outcome in this case, the ACCC is unlikely to be deterred from investigating, and referring to the CDPP for criminal prosecution, matters that involve serious cartel conduct.
Background
Criminal cartel offences were first introduced into Australia's competition law in 2009. Since the introduction of those provisions there have been 3 convictions for cartel conduct, involving two Japanese shipping companies (Nippon Yusen Kabushiki Kaisha and Kawasaki Kisen Kaisha Ltd) and a Norwegian-based shipping company (Wallenius Wilhelmsen Ocean AS). Each of the convicted shipping companies pled guilty to criminal cartel conduct so did not face contested jury trials. These three cases resulted in combined penalties of AUD 83.5 million, and each included material discounts (ranging between 50% and 20%) for cooperation and an early guilty plea.
In February 2018, the Commonwealth Director of Public Prosecutions ("CDPP") brought criminal cartel charges against Country Care Pty Ltd, its managing director Mr Hogan and a former employee Mr Harrison (the "accused") after an investigation by the Australian Competition and Consumer Commission ("ACCC") into an alleged cartel in the market for the supply of assistive technology products used in rehabilitation and aged care.
The CDPP's case against Country Care, and the two individuals, was the first criminal cartel prosection in Australia:
- to be contested, and therefore brought before a jury;
- against individuals; and
- against an Australian corporation.
In Australia, there is a constitutional requirement for Commonwealth indictable offences to be tried by a jury of peers. If convicted of cartel offences, the two individuals each faced maximum sentences of up to ten years imprisonment.
The judgment
In the Federal Court trial, the CDPP alleged the accused engaged in the following conduct said to constitute criminal cartel conduct:
- Price fixing: the CDPP alleged that Country Care attempted to induce a group of competitors to agree not to advertise goods for sale to the Department of Veteran Affairs below a specified minimum price; and
- Bid rigging: the CDPP alleged that Country Care gave effect to two bidding arrangements with two competitors in relation to two HealthShare NSW tenders.
After a lengthy 12 week trial, the jury deliberated for only four hours before unanimously acquitting the accused of all charges. As this was a jury trial, there is no written judgment from the court and so it impossible to determine the basis on which the accused were acquitted by the jury. For example, it was reported that the accused relied on both the joint venture and anti-overlap exceptions to cartel conduct and on the fact that legal advice had been taken before implementing the alleged arrangements.
Despite the acquittal, the accused undoubtedly experienced a heavy emotional and financial burden during the three years for which this matter was before the courts and the period of the ACCC investigation prior to proceedings being commenced. Further, in the criminal jurisdiction, there is no recovery of costs for the accused even if they succeed – as Country Care did – in being acquitted on all charges.
Comment
Despite the outcome in this case, the ACCC is unlikely to be deterred from investigating, and referring to the CDPP for criminal prosecution, matters that involve serious cartel conduct. The CDPP currently has three criminal cartel cases on foot, pursuing a range of large and small businesses, and individuals associated with those entities, across various sectors of the economy. Cartel conduct causing detriment in Australia remains an enduring priority for the ACCC and in relation to criminal cases, ACCC Chair Rod Sims has recently stated in the ACCC's annual address to the Committee for Economic Development of Australia that the ACCC "has an active list of criminal prosecutions in the pipeline for 2021".
With thanks to Andrew McClenahan and Nessa Salvador of Ashurst for their contributions.
