Fines and imprisonment for anti-competitive behaviour
Even heavier penalties apply to more recent offences.
The ACCC (the Australian Competition and Consumer Commission) takes a very active position against breaches of the consumer protection law. The Commission has a number of ways of receiving information that can lead to an investigation, including anonymous tip-off facilities. This makes it imperative for businesses to ensure they and their staff understand the law and abide by it.
Cartel Conduct
In 2019 waste management companies Bingo and Aussie Skips entered into a price fixing arrangement for demolition waste services in Sydney. Complaints were made to the ACCC about price rises and the Commission commenced an investigation. Ultimately the two companies and their CEOs were put before the courts by the Commonwealth Director of Public Prosecutions.
Despite the fact that the cartel conduct only persisted for a few months, and even taking into account early guilty pleas, the court imposed penalties on the two companies of $30 million and $3.5 million respectively
18 months’ imprisonment
The then CEO of Bingo was given two sentences 18 months each, to be served concurrently over two years as an intensive correction order, including 400 hours of community service.
He was also fined $100,000 and banned from managing corporations for a period of five years.
The then CEO of Aussie Skips was given a sentence of 18 months’ imprisonment, to be served as an intensive correction order, including 300 hours of community service.
He was also fined $75,000 and banned from managing corporations for a period of five years.1
Misleading or Deceptive Conduct
Grays online auction company has agreed that it should be fined $10 million for making false or misleading representations between 1 July 2020 and 30 June 2022 about the details of cars offered for sale on its online auction site.
According to the ACCC at least 750 consumers bought cars that had been incorrectly described. For example, cars described as being automatics, that were in fact manuals; cars advertised as different models than they were, or as having features that they didn’t; or cars that had defects that weren’t mentioned on the site.
In addition to the penalties Grays will need to offer redress to the affected consumers.2
Insider Trading – Imprisonment
Prosecutions under the Corporations Act for insider trading commonly result in prison sentences: while it can be difficult to discover an insider trader, when they are found, ASIC and the Courts respond decisively.
In March 2024 Cameron Waugh was sentenced to two years’ imprisonment – 15 months suspended – for insider trading in the Genesis Minerals restructure case. He had illegally profited to the extent of around $60,000. He was also required to repay the gains and was disqualified for five years.4
In March 2023, former Tesla director Kurt Schlosser, was given a two-and-a-half year sentence for insider trading where he made an illegal profict of around $29,000.5
Significantly higher penalties
Both these cases occurred before the penalties were increased in November 2022. The maximum financial penalties are now five times greater than before.
Inadvertent Offences
There are numerous cases where offences were not carried out with the explicit intention of misleading consumers or depriving consumers of their rights, but instead they were cases of businesses not having appropriate or effective systems in place, where internal reports of possible breaches were ignored or not properly responded to, or where staff simply did not underestand their legdal obligations.
In such cases, regulators proceed on the basis that businesses have an obligation to ensure their compliance processes and systems are appropriate and effective, and significant penalties nevertheless apply.
Staff and Management Training is a crucial line of defence.
ASIC and the ACCC are clearly in a mood to litigate and prosecute for breaches of the law in this space. ACCC Chair, Gina Cass-Gottlieb, said recently
We will continue to investigate cartel conduct and refer appropriate matters to the Commonwealth Director of Public Prosecutions for consideration of criminal prosecution,”
We encourage anyone who observes anti-competitive conduct in their industry or workplace to contact the ACCC confidentially. We will review their concerns and take action if warranted.3
That being the case it is crucial that businesses ensure their staff are aware of their obligations under the law, with training programs that are up to date, complete and targeted to the needs of the individual business and of the roles of particular staff.6 Modern eLearning developments can now easily facilitate this sort of targeted training.
GRC Solutions Resources
We have an extensive suite of commercial practices compliance training, a major feature of which is our Competition and Consumer Protection Training Course. Details here.
Notes
4 ASIC’s press release is here
5 ASIC’s press release is here
6 See our commentary on compliance training systems here and our article on the importance of targeted training here.