Thursday, June 26, 2008

Want to confess to being part of a cartel? Take a number.

Businesses are literally queuing up to confess their involvement in illegal cartels, approaching the Australian Competition and Consumer Commission for immunity from prosecution at the rate of one per month.

The ACCC Chairman Graeme Samuel revealed the figure in an address to the National Press Club yesterday in which he called for jail terms as a punishment for business leaders found to have colluded to raise prices.

“There is great alarm at present at the rising cost of essential consumer goods, most notably petrol and groceries,” he told the Press Club.

“But imagine for a moment the impact on household budgets if these goods suddenly became a further 20 per cent more expensive for no obvious reason.”

“This is the direct impact cartels can have on consumers. Since we introduced our
cartel immunity policy in September 2005 we have had 40 applicants for immunity – an average of about one a month.”

But Mr Samuel said many of those wanting to confess had to queue...

“Their legal advisors ring up and say ‘we want to confess’, and we have to say ‘sorry, you‘re too late, you’ve been beaten by someone else, so you will face potentially full prosecution unless the person or persons - and you don’t know how many there are in the queue in front of you - fall over, either through lack of cooperation, or being shown to be the real leader of the cartel’”.

“They might fall over and then you might shift up the queue, but you won’t know how far down the queue you are.”

“All you do know is that as currently stand there are parties before you who are potentially going to tell us all about that cartel.”

“You will potentially face prosecution and hopefully from next year, you will potentially face jail.”

The ACCC has 21 alleged cartels under investigation, about half of them resulting form information provided by business figures seeking immunity. Another six are in court.

Mr Samuel wouldn’t comment on proceedings currently underway against the former head of the Visy cardboard packaging company Richard Pratt who faces up to four years jail for lying about his knowledge of a cartel.

But he did say that the case against Visy came to light because its co-conspirator Amcor “came in and said look, we have discovered that there has been a cartel in operation, we will tell you the lot”.

“And I have to say to you, if they don’t tell us the lot, they don’t satisfy one of the fundamental conditions of immunity which is that you give absolutely total and complete co-operation – you tell us everything right up to the conclusion of the court hearing. That’s the condition of immunity.”

So successful had been the immunity policy that Mr Samuel was being approached by businesses that in fact had done nothing wrong.

“People will come and confess to us a cartel, which is truly is not a cartel,” he said.

“But they are worried. That’s good.”

The Chairman said that the behaviour of petrol stations that exchanged information about prices came close to being an illegal cartel.

“Consumers can’t get that information. But the retailers
have it on their computer screens in their head offices and they know how to adjust their prices through the day minute by minute to reflect what their competitors are doing.”

“That is certainly a very cozy arrangement and it is as close to an illegal collusion as you can get, but it is not illegal, and I emphasise it is not illegal, on our analysis.”