A number of key developments in Australia and beyond will likely boost fines meted out in the near future
Despite a decrease in the value of fines for cartel behaviour imposed by Australia in recent months, the space is likely to get a boost in activity in the country and in Asia, a top lawyer predicts.
Allen & Overy’s global cartel enforcement report for the first half of 2017 recorded only one fine from the Australian Competition and Consumer Commission (ACCC), totalling US$7m. In the first six months of 2016, the regulator issued four fines, valued at US$34.5m.
Globally, cartel fines totalled US$1.64bn for the first half, but the figure is heavily influenced by the nearly US$1bn in fines the European Commission re-imposed on air cargo careers this year. With these specific fines removed, totals are significantly below mid-2016 levels.
However, the decrease in fines in Australia doesn’t mean that the ACCC has decided to slow down, said Peter McDonald, who is A&O’s APAC competition head.
“The lower level of fines recorded in recent months in Australia does not suggest a slowing of enforcement activity. These investigations and legal proceedings take time and tend to deliver ‘lumpy’ results,” he tells Australasian Lawyer. “In Australia, competition laws are well established and the ACCC is very active. Recent cases and public statements show the regulator is seeking to dramatically increase the value of corporate fines and to bring criminal prosecutions against individuals.”
A&O is expecting to see increased activity in the second half of 2017, he said, particularly because the ACCC is awaiting judgments on a number of proceedings, most notably its High Court appeal case against Flight Centre. Further outcomes will likely be seen in the coming months.
“Over the next twelve months, we’ll continue to see the ACCC pushing strongly for higher penalties and criminal sanctions. The competition regulator has been publicly pursuing this agenda through the courts and the media for some time,” McDonald said.
Recent trends in Asian countries will also likely boost the cartel enforcement landscape in Asia, McDonald said.
“South Korea and Japan have similarly mature economies and established competition regimes, and have produced a steady flow of fines. We expect fine volumes to grow out of Hong Kong and Singapore as these jurisdictions become more established,” he said. “We’ll also see increasing activity in countries with rapidly developing economies where a competition law enforcement record has not yet been fully established, such as the Philippines and Thailand.”
The landscape will also be likely boosted by very large economies. China in particular is tipped to see results of its efforts in the near future.
“The very large economies of China and India will play a much greater role in enforcement in the near future. Both China and India have established competition laws in place, but much of the cartel enforcement focus to date has been domestic. With the internationalisation of investigations, China in particular will be the country to watch as it continues its path to be a major anti-trust jurisdiction along with the EU and US,” McDonald said.
“China is already an established key regime for merger control, and China’s cartel regulators are keen to be more active in cartel enforcement. Given the level of sophistication and constant improvement they’re displaying in the merger space, that’s likely to eventuate in the near future,” he said.
With all these factors currently in play in the cartel enforcement space, businesses should expect higher fines and more regulatory action in both Australia and the larger Asia region.
“It’s worth noting that China and several other APAC regulators are also pushing for higher fines for breaches of competition law, so it is almost certain that increasing penalties for cartel behaviour will continue across the region,” McDonald said.
“The combined impacts of the introduction of enforcement in countries where it has previously been lacking, and the increasing activity and international cooperation of established players, means the enforcement landscape is rapidly developing and businesses operating in APAC must be more conscious of questionable practices across the region,” he said.
Peter McDonald
Related stories:
Global firm urges in-house teams to be alert as cartel fines rise worldwide
Australian class actions set to rise, says top firm
Allen & Overy’s global cartel enforcement report for the first half of 2017 recorded only one fine from the Australian Competition and Consumer Commission (ACCC), totalling US$7m. In the first six months of 2016, the regulator issued four fines, valued at US$34.5m.
Globally, cartel fines totalled US$1.64bn for the first half, but the figure is heavily influenced by the nearly US$1bn in fines the European Commission re-imposed on air cargo careers this year. With these specific fines removed, totals are significantly below mid-2016 levels.
However, the decrease in fines in Australia doesn’t mean that the ACCC has decided to slow down, said Peter McDonald, who is A&O’s APAC competition head.
“The lower level of fines recorded in recent months in Australia does not suggest a slowing of enforcement activity. These investigations and legal proceedings take time and tend to deliver ‘lumpy’ results,” he tells Australasian Lawyer. “In Australia, competition laws are well established and the ACCC is very active. Recent cases and public statements show the regulator is seeking to dramatically increase the value of corporate fines and to bring criminal prosecutions against individuals.”
A&O is expecting to see increased activity in the second half of 2017, he said, particularly because the ACCC is awaiting judgments on a number of proceedings, most notably its High Court appeal case against Flight Centre. Further outcomes will likely be seen in the coming months.
“Over the next twelve months, we’ll continue to see the ACCC pushing strongly for higher penalties and criminal sanctions. The competition regulator has been publicly pursuing this agenda through the courts and the media for some time,” McDonald said.
Recent trends in Asian countries will also likely boost the cartel enforcement landscape in Asia, McDonald said.
“South Korea and Japan have similarly mature economies and established competition regimes, and have produced a steady flow of fines. We expect fine volumes to grow out of Hong Kong and Singapore as these jurisdictions become more established,” he said. “We’ll also see increasing activity in countries with rapidly developing economies where a competition law enforcement record has not yet been fully established, such as the Philippines and Thailand.”
The landscape will also be likely boosted by very large economies. China in particular is tipped to see results of its efforts in the near future.
“The very large economies of China and India will play a much greater role in enforcement in the near future. Both China and India have established competition laws in place, but much of the cartel enforcement focus to date has been domestic. With the internationalisation of investigations, China in particular will be the country to watch as it continues its path to be a major anti-trust jurisdiction along with the EU and US,” McDonald said.
“China is already an established key regime for merger control, and China’s cartel regulators are keen to be more active in cartel enforcement. Given the level of sophistication and constant improvement they’re displaying in the merger space, that’s likely to eventuate in the near future,” he said.
With all these factors currently in play in the cartel enforcement space, businesses should expect higher fines and more regulatory action in both Australia and the larger Asia region.
“It’s worth noting that China and several other APAC regulators are also pushing for higher fines for breaches of competition law, so it is almost certain that increasing penalties for cartel behaviour will continue across the region,” McDonald said.
“The combined impacts of the introduction of enforcement in countries where it has previously been lacking, and the increasing activity and international cooperation of established players, means the enforcement landscape is rapidly developing and businesses operating in APAC must be more conscious of questionable practices across the region,” he said.
Peter McDonald
Related stories:
Global firm urges in-house teams to be alert as cartel fines rise worldwide
Australian class actions set to rise, says top firm
