Lie to the ACCC at your peril - the ACCC commences criminal prosecution for breach of section 155 of the Trade Practices Act
By Kathryn Edghill, Partner and Graham Maher, Partner
20 June 2008
In a high profile case demonstrating the seriousness with which Australia’s competition regulator, the Australian Competition and Consumer Commission (ACCC) will pursue those involved in breaches of the Trade Practices Act (TPA), the ACCC has commenced criminal proceedings against the chairman of the Visy Group of companies, Mr Richard Pratt, alleging that he gave false evidence to it during its investigation of price fixing between Visy and a competitor, Amcor, in the corrugated cardboard carton industry in Australia.
Background – The Visy/Amcor Cartel
In December 2005 the ACCC commenced civil proceedings against a number of the companies in the Visy Group and a number of senior executives including its chairman Mr Richard Pratt, alleging a price fixing cartel in breach of section 45 of the TPA. This followed, among other things, the grant of immunity from prosecution to Amcor as a result of it blowing the whistle on the cartel and the issue of a notice pursuant to section 155 of the TPA requiring Mr Pratt to attend before the ACCC for examination on oath.
The civil proceedings were eventually resolved with Visy and Mr Pratt being found liable for their roles in the cartel and the Visy companies receiving penalties totalling $36 million from the Federal Court.
Section 155 of the Trade Practices Act
Section 155 of the TPA confers on the ACCC significant powers to, amongst other things compel the production of documents and information to it and to require individuals to attend before the ACCC to be examined on oath where the ACCC has a reasonable belief that there has been a contravention of the TPA. Section 155(5) of the TPA prohibits a person from knowingly furnishing information or giving evidence to the ACCC that is false or misleading in purported compliance with a section 155 notice. A contravention of that section is an offence punishable on conviction by a fine of up to $2,200 or imprisonment for 12 months.
The Allegations against Mr Pratt
Full details of the allegations against Mr Pratt are not yet known but reports are that they relate to evidence given by Mr Pratt during his section 155 examination. The ACCC will bear the onus of proving beyond reasonable doubt that the evidence which Mr Pratt gave to it was given by him knowing that it was false or misleading. It is not yet known whether, and on what basis, Mr Pratt will defend the proceedings.
The Penalty
At this stage it is not known what penalties the ACCC will seek in the proceedings against Mr Pratt. There is, however, precedent for the Federal Court to award prison sentences in respect of breaches of section 155 of the TPA, the most recent being a sentence of 6 months imprisonment which was handed down to Mr Paul John Rana following his conviction for offences under the TPA including failure to comply with notices issued under section 155.
It would not be surprising, in our opinion, for the ACCC to seek a jail term for Mr Pratt should they be successful in convicting him in respect of the alleged offences because:
- the maximum financial penalties under the section are relatively small;
- in the case of a wealthy businessman such as Mr Pratt, such penalties may not be regarded by the ACCC as having sufficient deterrent effect; and
- while cartel conduct itself is not yet a criminal offence in Australia, and although these allegations against Mr Pratt do not directly relate to the cartel offence itself, we would expect the ACCC to seek to use these proceedings to reinforce its position that cartel participants should be subject to the full weight of the criminal law.
Conclusion
It is early days yet in respect of the proceedings commenced by the ACCC and it is important to bear in mind that these serious allegations will need to be proven. However, the commencement of the proceedings themselves sends a very clear message about the ACCC’s determination to seek appropriate punishment for those it alleges breach the TPA, particularly where it involves cartels.