MORE CARTEL CONDUCT IN THE SHIPPING OF VEHICLES

Criminal charges have been laid against global shipping giant Kawasaki Kisen Kaisha (K-Line) after an investigation by the ACCC found the Japanese company’s involvement in cartel conduct occurring between July 2009 and September 2012. K-line is an international company specialising the importation of trucks, buses and cars.

Under section 44ZZRG of the Competition and Consumer Act 2010 it is a criminal offence for businesses to partake in a cartel. A cartel occurs when businesses agree to cooperate rather than compete with one another, ultimately increasing cartel members’ own profits under the guise of competition necessary to maintain healthy economic growth.

This isn’t the first of charges laid against K-line. In 2014, in the US, K-line pleaded guilty to cartel conduct such as price fixing, customer allocation and tampering bids, which resulted in the company being fined $91.5 million (AUD). Its executive was also sentenced to 18 months imprisonment.

As outlined by the ACCC, if K-line is found guilty, “The maximum fine for each criminal cartel offence is $10 million, or three times the total benefits that have been obtained and reasonably attributable to the commission of the offence; or where benefits cannot be determined, 10% of the corporation’s annual turnover connected with Australia.”

The matter is expected to remain before court until 7 February next year, meanwhile investigations continue to be carried out with the company’s remaining vessels.

This case follows on from the first successful prosecution of Nippon Yusen Kabushiki Kaisha (NYK). In July this year NYK pleaded guilty to cartel conduct occurring between 2009 and 2012.

Furthermore, global automotive parts supplier, Yazaki, and its Australian subsidiary, Australian Arrow Pty Ltd (AAPL), engaged in cartel offences of trading and agreeing on prices as well as allocating sections of the market with its competitor in the supply of wire harnesses to Toyota Motor Corporation (Toyota).

The cases and investigations reflect ACCC’S enforcement priorities and crackdown on cartel conduct.

It serves as a reminder to all in the automotive industry that any cartel conduct will incur severe civil and criminal liabilities.

Forms of cartel conduct include:

  • restricting the availability of services and goods to consumers
  • price fixing: rather than competing, individuals and businesses agree on a set price
  • market sharing: when businesses cooperate in the division of market to avoid competition, and
  • rigging bids.

The ACCC often rely on informants of such conduct and have established an immunity policy for those who come forward first.

Vinesh George
Company Secretary and Legal Counsel, AADA

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