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Cartel Conduct and Its Changing Landscape

Disputes

The Failure to Prosecute Criminal Conduct under the new Cartel Provisions

In media release number 10/22 by the Australian Consumer and Competition Commission (‘the ACCC’), on 11 February 2022 it was confirmed that “the Commonwealth Director of Public Prosecutions (‘CDPP’) withdrew charges against Citigroup Global Markets Australia Pty Limited (‘Citigroup’), Deutsche Bank AG and four senior banking executives in relation to criminal cartel allegations arising from an ANZ institutional share placement in August 2015.”

This comes after the CDPP dropped charges against ANZ Bank and one of its senior executives, Rick Moscati, for the above alleged conduct in November 2021.

Background

In a nutshell, it was alleged that the ANZ Bank tried to sell shares using merchant banks. They advised that these merchant banks could keep any leftover shares which were unable to be sold. It was alleged that a few of these banks which are meant to be competing against each other cut a deal to avoid flooding the market with these shares to keep the price up. This was an important test case because no Australian bank had been charged with criminal cartel offences before.

Immunity

Unlike immunity from prosecution in criminal matters, where it is very rare for an offender to receive complete immunity, the ACCC offers full immunity on a ‘first come first served’ basis. In this case, it was JP Morgan who notified the ACCC of the conduct first and was therefore given immunity. An investigation was conducted, and several banks and individuals were charged with cartel conduct.

Botched Prosecution

The proceedings involved lengthy and complicated interlocutory proceedings, which are essentially intermediary applications before the substantive proceedings. The starkest amongst the myriad of issues in this case was the complete lack of statements by ACCC investigators, and the absence of any substantive statements, proper note taking, and proper disclosure. The indictments were sorely lacking in detail and ultimately, after many attempts and finally getting an indictment in, it was found that what was described in the indictment was not actually an offence.

Outcomes for the Future

The lack of cohesion between experts in competition law and criminal law in how to prosecute these offences, and the drafting of the relevant legislation, are attributed to creating this mess. Only time will tell how the ACCC approaches these matters, going forward. This may influence more civil sanctions being sought in the future rather than criminal.

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