Australian antitrust probes could makes use of obstruction charges, former US justice department official says

18 Oct 2019 12:00 am by Laurel Henning

Australia’s competition regulator could use criminal obstruction charges leveled at former BlueScope Steel manager Jason Ellis as an example for future cartel probes, an ex-US Department of Justice official has said.

Lisa Phelan, the former head of the DOJ’s criminal antitrust enforcement unit, told MLex that obstruction charges were an important tool in antitrust cases and could prove valuable in Australia.

Phelan, who is now a partner at law firm Morrison & Foerster after more than 25 years working in the DOJ's antitrust division, said that many cartel investigations were obstructed.

“It seems to be reflexive [as a response]. People burn papers in the fireplace, bury hard-drives in the back yard, or throw laptops in the river,” Phelan told MLex in an interview.

Ellis is facing the first charges in Australia brought against an individual for inciting the obstruction of an official working for the country’s prosecutor, the Commonwealth Director of Public Prosecutions.

The criminal charges carry a maximum penalty of two years’ imprisonment per offense.

The Australian Competition & Consumer Commission announced civil cartel proceedings against BlueScope and Ellis in August.

The cartel conduct is alleged to have occurred between September 2013 and June 2014, with the goal of fixing or raising the prices of flat-steel products supplied in Australia.

Phelan told MLex today that the case “isn’t one the DOJ would normally charge as a cartel, because it’s an attempt at cartel conduct.”

“If charges were laid in this case in the US, they would more likely be fraud, rather than cartel charges,” Phelan said.

Nevertheless, Australian regulators may “realize [an obstruction charge] is an important lever over the head of executives," she said. "Without it, it’s hard to break the idea within companies that if no one speaks, no one gets in trouble."

Phelan said: “Without obstruction charges, it would be much harder to bring cartel cases, because people hide evidence and the fear of obstruction charges sometimes stop them. It’s an important tool in building a cartel case.”

“Hopefully [Australian regulators] see the value in the measure, despite the extra time and resources it requires,” Phelan said.

“More often than not, obstruction charges lead an individual to be cooperative — the threat of jail time is taken seriously in court and leads people to think more seriously about cooperating,” she said, adding that extensive cooperation could see a reduction of charges.

The first hearing in the criminal obstruction charges brought against Ellis will be heard at a Sydney court on Nov. 5.

The civil cartel proceedings are scheduled for a case management hearing before the Federal Court of Australia on Nov. 1.

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