What should corporate Australia expect from the courts and competition authorities this year?
Four trends are likely to be pronounced in cartel enforcement in Australia this year.
The projection was made by Peter McDonald, Allen & Overy partner and head of competition in the Asia-Pacific region, as the global firm released its Global Cartel Enforcement Report.
“A key trend we’ve seen over the past year has been a marked rise in individual liability; here in Australia, that’s been particularly evident in high-profile criminal prosecutions in the banking industry. In the post-Hayne landscape, public scrutiny of individuals, companies and regulators is running high; as a result, we anticipate a rise in white collar criminal prosecutions,” McDonald told Australasian Lawyer.
The former senior officer at the Australian Competition and Consumer Commission (ACCC) also said that larger fines can be expected to be levied by Australian courts, reflecting what he said is “public angst” over unethical conduct in corporate Australia.
“Courts are ordering significantly higher fines, sometimes even beyond those recommended by the ACCC. Five to 10 years ago, it was an entirely different regulatory environment; now, corporations need to tread more carefully in the face of increasingly heavy fines,” he said.
Authorities are also shifting their focus sector-wise as they adapt to the current business environment.
“Previously, we saw more enforcement activity in sectors like energy and resources, but now we’re seeing a focus in the digital sphere. The nature of commerce is changing as we adapt to digital transformation of virtually every sector, and subsequently regulators are tackling new and emerging challenges as technology changes the way we do business; this has been reflected in the rapid setup of digital units within regulatory bodies in Australia and around the world,” he said.
McDonald also said that an interesting area to observe is the intersection of whistleblowing and class actions.
“Increasingly, we’re seeing tension at the intersection of whistleblower immunity and the possibility of being prosecuted in an ensuing class action. People generally think carefully before blowing the whistle when the possibility of a large class action is increasingly likely in Australia,” he said.
Global trends
Allen & Overy’s competition experts observed a continued focus on tackling national and international cartels in 2019.
Many jurisdictions imposed more fines compared to 2018. The European Commission continued to be the global leader, imposing fines of US$1.6bn in 2019, compared to 2018’s US$946m. Significant increases were also observed in the US, Japan, Germany, Italy, and France, while previously aggressive jurisdictions, like South Korea and Brazil, experienced a major drop in fines.
Australia’s total cartel fines for 2019 were US$37.9m, the firm said. That’s a decrease from US$45.6m in 2018.
In terms of sectors, most cartel enforcements globally were focused on transport and infrastructure, which tallied 24% of all actions. The sector is followed by industrial and manufacturing (17%), TMT (13%), and consumer and retail and construction (8% each).
