PM - Friday, 2 November , 2007 Reporter: Alison Caldwell
MARK COLVIN: The head of the competition regulator has urged the Federal Government to bring in criminal sanctions for companies guilty of cartel behaviour.
The ACCC Chairman Graeme Samuel said Australia should fall in line with other countries to impose criminal sanctions, including jail terms, for those who engage in cartel activities.
He was responding to the news that the packaging giant Visy had been fined $36-million for a four-year price-fixing and cartel scheme with rival company Amcor.
Visy's billionaire chairman Richard Pratt wasn't in court today, and he escaped a personal penalty.
Alison Caldwell reports.
ALSION CALDWELL: Ironically enough, the ACCC first heard reports of price-fixing and cartel behaviour in the cardboard packaging industry during an international conference on, of all things, cartel activity in November 2004.
That's when Amcor executives approached the ACCC and admitted their role in a price-fixing deal with rival Visy.
Bob Alexander was one of the ACCC's lead investigators in the case.
BOB ALEXANDER: We were quite surprise being notified of a cartel at a cartel conference. And it was quite appropriate, but from that day, we've had a lot of work to do to bring it to this stage.
ALSION CALDWELL: Three years later, paper giant Visy has been fined $36-million. Former CEO Harry Debney, who resigned last week, was fined $1.5-million, and the former general manager Rod Carroll was fined $500,000.
Visy was also ordered to pay the ACCC's legal fees, possibly as much as $6-million.
Handing down his judgement today, Federal Court Justice Peter Heerey said Visy's behaviour was unprecedented.
PETER HEEREY: This was the worst cartel to come before the court in the 30 plus years in which such conduct has been illegal in Australia.
ALSION CALDWELL: From the outset, Visy denied any wrongdoing.
But last month, as a lengthy trial loomed, Visy chairman Richard Pratt admitted his company had broken the law and expressed regret for any concerns of customers or staff.
Today Justice Heerey was scathing about the behaviour of Visy's executives. The cartel went on for almost five years. Had it not been accidentally exposed, he said, it would probably still be flourishing.
"It was run from the highest level in Visy, it was carefully and deliberately concealed, and it was operated by men who were fully aware of its seriously unlawful nature", the Judge said.
He said Visy's contrition probably has a substantial element of regret at being found out.
"Richard Pratt's one and only meeting with Amcor's CEO at an inner city hotel was of major importance to the operation of the cartel", Justice Heerey said. "Pratt gave his personal sanction to the obviously unlawful arrangement and it wouldn't have continued without his approval".
Under the Federal laws as they are today, Justice Peter Heerey couldn't impose a criminal sanction against Visy's executives.
In his judgment he points out that Australia is far behind many other countries, including the US, Canada and the UK, where criminal sanctions including jail terms can be imposed on those who engage in cartel activities.
Describing cartels as a cancer on the Australian economy and an insidious attack on consumers by well dressed thieves, the ACCC's Graeme Samuel said criminal penalties should be imposed on those found guilty.
GRAEME SAMUEL: Australia must fall in line with other jurisdictions by imposing criminal sanctions, that include jail terms for executives who engage in cartel activities. Let me be clear, nothing concentrates the mind of an executive contemplating, creating or participating in a cartel more than the prospect of a criminal conviction and a stretch in jail.
When monetary penalties and damage to reputation are the only risks, some gritty executives will run the gauntlet. But a criminal conviction, coupled with jail time for executives who, to mediate, to meditate on their actions, would in my mind provide the greatest deterrent.
ALSION CALDWELL: The ACCC's chairman disputed Visy's long held claims that it was unaware of Australia's anti price-fixing laws.
GRAEME SAMUEL: The companies involved were long established. It beggars belief that their executives were not well aware of the business laws under which they operated. Whether they were privately owned or publicly listed, this case is a warning to those involved in cartels or thinking of it. That the ACCC's immunity policy works.
ALSION CALDWELL: Graeme Samuel said that as a result of the ACCC's immunity policy, individuals are now coming forward at a staggering rate.
GRAEME SAMUEL: Our immunity policy has been so effective that probably at the rate of about one a month. We've had people coming to us seeking to, at least out a marker down for immunity. Markers are situations where individuals or companies will come in, sometimes through their lawyers, and will say, "We think we have a problem, we think we are involved in a cartel, we want to investigate it. Can we put ourselves in a queue?"
ALSION CALDWELL: Quick to defend and even praise Richard Pratt last month, politicians had little to say about the case today. Labor leader Kevin Rudd was the only exception.
KEVIN RUDD: When it comes to criminalising the law, when it comes to cartel behaviour, we have had that as longstanding policy. Mr Costello says he support it, but two years down the track in parliament, has done nothing about it. I believe that if the Government was fair dinkum about it, they would criminalise. We intend to criminalise because it affects so many people out there in the economy and by way of general consumers as well.
ALSION CALDWELL: Visy and Amcor are being sued in a class action brought against them by 17,000 customers.
Visy has apologised and says it respects the courts decision.
MARK COLVIN: Alison Caldwell.