In recent years, we have observed an increasing awareness of anti-competitive conduct and strict enforcement by the regulators against prospective wrong-doers. The Nippon Yusen Kabushiki Kaisha (NYK) case should be considered a strong deterrent for companies from engaging in criminal cartel conduct within the Australian market.
The NYK case marks the first successful prosecution of a company for breach of criminal cartel conduct under the section 44ZZRG of the Competition and Consumer Act 2010 (Cth). NYK was convicted and fined $25 million; one of the highest fines ever imposed under the Act. The Japanese shipping giant admitted to colluding with other shipping companies in their contractual dealings concerning the importation of motor vehicles, including cars, trucks and buses, into Australia. The Chairman of the ACCC, Rod Sims, highlighted the gravity of the offence and stated: “The Australian community relies heavily on imported vehicles, so a longstanding cartel in relation to the transportation of those vehicles to Australia was of significant concern.”
The conduct in question related to the shipping of motor vehicles into Australia from July 2009 to September 2012, although it is believed that collusion between NYK and other companies took place from as early as 1997. Between the relevant period, a total nearing 70,000 motor vehicles were shipped under these arrangements. The cartel was effectuated by both telephonic and face-to-face communications between employees of these companies. As is common with this kind of conduct, the conversations between employees were very rarely documented and were, as His Honour Justice Wigney made plain, demonstrative of a deliberate and covert operation.
It may be useful at this point to elaborate on the process involved in these cases. The matter was referred by the ACCC to the Commonwealth Director of Public Prosecutions (CDPP), who laid the charges against NYK. The CDPP are a statutory prosecutor for criminal offences, such as criminal cartel conduct. This body will commence a matter on the basis of satisfying dual elements, namely:
- That sufficient evidence exists to prosecute the case; and
- The prosecution would be in the public interest.
Sufficient evidence requires that there be a reasonable prospect that the wrong-doer would be convicted. For further information on the CDPP Prosecution Policy, please click here.
The case highlights the benefits of negotiating with and assisting the regulators when a company finds itself in these sorts of positions. That is, the entering of a guilty plea by NYK in the Federal Court, as well as the continuous cooperation of the company with the ACCC’s investigation, contributed to a reduction of the overall penalty. According to the ACCC, NYK could have been facing a fine of up to $100 million. Additionally, entering a guilty plea meant that the executives of NYK obfuscated the prospect of imprisonment. Thus, this case exemplifies the need for companies facing investigations for anti-competitive behaviour to consider very carefully before refuting ACCC allegations and minimising accountability.
The NYK case delivers a strong warning against anti-competitive behaviour and criminal cartel conduct for companies operating in the Australian market. These issues are of increasing concern, and so it is not unexpected that a more severe approach will be adopted on the part of the ACCC into the future.
This article was authorised by Warwick Heeson.