ACCC loses first contested criminal cartel case

3 minute read  04.06.2021 Haydn Flack, Paul Schoff

The ACCC has recorded a historic loss in the first criminal cartel case to run to trial in Australia. It is, however, a reminder of the impact (time, cost, stress) of regulatory investigations.

The ACCC has been handed a significant loss in its first criminal cartel case taken to trial, with the jury acquitting the defendants on all counts. With cartel conduct having been criminalised in Australia for 12 years, this result represents a bruising defeat for the ACCC. While the defendants have ultimately been vindicated, this outcome is also a reminder of the importance of compliance and the impact – financial and emotional – which can result from a regulatory investigation and prosecution.

Following a trial that ran for almost 50 days, the jury in criminal proceedings against Country Care Group, its CEO and a former employee has handed the ACCC a historic defeat. After deliberating for a matter of hours, the jury delivered a unanimous verdict – acquitting the company and the individuals on all counts. More than three years after charges were first laid, this draws to a close a lengthy investigation. While this represents a poor start to the ACCC's pursuit of criminal convictions, it is a clear reminder of:

  • The length of cartel investigations, including the added complexities of criminal procedure
  • The incredible burden of regulatory investigations, even if they ultimately end in vindication

Criminal investigations and prosecutions take time

The Country Care proceedings are one of eight cases to be prosecuted to date under the criminal cartel provisions in Australia's competition law. It is the first to run to trial. The criminal cartel matters commenced to date show the significant time that is involved in preparing and hearing these cases:

  • Guilty pleas were entered in three cases, with the time between laying charges and sentencing averaging almost two years
  • Of the remaining cases, four have been running for more than two years, with the Country Care matter before the courts for more than three years between charges being laid and the defendants ultimately being acquitted.

That doesn't take into account the ACCC investigation, with the Country Care matter reportedly running for more than five years in total.

The toll for impacted businesses and individuals is significant

While the Country Care defendants have ultimately been vindicated, that cannot address the impact to the business and the effect on the individuals involved. Long running investigations and enforcement action have impacts that are difficult to quantify including:

  • The cost of responding to ACCC notices and defending proceedings
  • The time involved, including distraction of staff and management
  • The emotional toll, particularly for individuals charged but also those subject to compulsory examination

This outcome is unlikely to stem the ACCC's enthusiasm for criminal prosecutions

The ACCC and CDPP will no doubt reflect on the Country Care outcome and the difficult decisions involved in determining whether to refer matters and commence prosecutions. However, it is unlikely to have any material impact on the ACCC's enthusiasm to investigate and refer to the CDPP matters that it considers involve serious cartel conduct. The outcome also does not reduce:

  • The significant risks arising from cartel behaviour – be that criminal conviction or significant civil pecuniary penalties
  • The impact of an ACCC investigation, even if it does not ultimately lead to prosecution (or enforcement action)

The outcome in Country Care represents long awaited vindication for the defendants and a bruising defeat for the ACCC in the first cartel prosecution to make it before a jury. It is, however, a reminder of:

  • The importance of robust competition and antitrust compliance procedures
  • The need for a clear understanding of key obligations and processes, including the ACCC's Immunity and Cooperation Policy.

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https://www.minterellison.com/articles/accc-loses-first-contested-criminal-cartel-case