The timing of Australia's new criminal-cartel case will suit the competition regulator

8 June 2018 10:58am
Opera House Sails

1 June 2018. By James Panichi

The willingness of Australia’s competition watchdog to court the media hasn’t always ended well. Just ask Allan Fels, the founding chairman of the Australian Competition & Consumer Commission.

Fels’ media profile was sky-high — the result of an approach he reportedly took from his mentor, Aubrey Jones, the flamboyant former head of the UK’s Prices & Incomes Board. And this was often cited as the reason for the government’s decision to cut short the regulator’s mandate in 2003.

Yet, speak to any ACCC official and they’ll tell you that the watchdog’s media strategy is simple. Not having the resources to pursue every suspected cartelist, the ACCC must showcase a high-profile case, then flood the media about it, hoping to scare the wits out of others engaging in anticompetitive behavior.

Which is why the timing of today’s revelations that the Australian federal prosecutor was set to charge three highly prominent banks — Australia and New Zealand Banking Group, Deutsche Bank, Citigroup — and a raft of senior executives with criminal-cartel charges will suit the ACCC down to the ground.

When it comes to Australia’s 2009 criminal-cartel laws, the regulator needs more than anything a narrative — something that will remind corporate boardrooms that several criminal investigations are now percolating and jail sentences of up to 10 years are very much on the table.

But until today, the tried-and-tested media strategy of drum-banging had been under a cloud — at least, as far as criminal charges were concerned.

The reason was that, under the law, the decision to prosecute doesn’t rest with the regulator, but with the federal prosecutor — the Commonwealth Director of Public Prosecutions, or CDPP. The ACCC merely investigates, then hopes the CDPP will care enough to prosecute.

So it was that, earlier this year, the CDPP announced that it would be laying criminal-cartel charges against a company called Country Care — the first time an Australian company had faced criminal-cartel charges and the first time individuals had been charged.

That case is set to kick off next week in the Melbourne Magistrates’ Court and had been — until today — the watercooler topic of conversation in antitrust law offices around the country.

Whatever the merits of the case, Country Care is a small company from the small, rural town of Mildura, in the northeastern corner of the state of Victoria. It sells mobility aids for the elderly and the disabled. It's safe to assume its managers aren't receiving multi-million-dollar bonuses.

The law is blind, of course — and the court charge sheet in the Country Care case reveals what are likely to be serious allegations of cartel agreements among the sellers of mobility aids throughout rural and regional areas of eastern Australia.

But will the Country Care case give the ACCC the showcase, criminal-cartel case it needs? Is this the prosecution that will have ACCC Chairman Rod Sims reach for his megaphone, in the hope of discouraging other potential cartelists in the cut-throat, mobility-scooter market?

Possibly not. Indeed, lawyers working in the field see the Country Care case as problematic for the ACCC — not in terms of the legal principles underpinning the case, but because it isn't likely to resonate with the media. In fact, there are those who argue it could backfire.

Which brings us to today’s news. At the height of a damning public inquiry into the operation of banks that has been revealing — day after painful day — the extent of the Australian banking industry’s often callous disregard for ethical behavior, banks don’t have many friends.

And that’s perfect for the ACCC. Whatever the merits of the court case — and, indeed, whatever the outcome — this prosecution will resonate. The risk of jail sentences, the hefty fines, the very criminality of the alleged violations — this is media fodder to die for.

What's more, when you offer reporters the chance to name-check some of the biggest businesses around — Australia and New Zealand Banking Group, Deutsche Bank, Citigroup — the articles write themselves.

To say that today's developments will overshadow next week’s Country Care trial is an understatement — the hearing in a lower court in Melbourne will be seen as a dress rehearsal for the main game. And the ACCC’s media strategy will live to fight another day.

Joh Sung-Wook Interview