17 May 2024The words “cartel conduct” usually bring to mind violent international drug crime gangs. But cartels can also mean you pay more when you renovate, repair or build a home, buy a vehicle or just go shopping.
Steep penalties for cartel conduct by two bin operators
In February 2024, the Federal Court handed down a sentencing decision on criminal cartel conduct by two operators of bins for demolition waste, Bingo Industries and Aussie Skips. (Please see Commonwealth Director of Public Prosecutions v Bingo Industries Pty Ltd; Commonwealth Director of Public Prosecutions v Tartak [2024] FCA 121.)
As presiding Justice Michael Wigney stated: “A cartel is an agreement between competitors not to compete.”
Bingo Industries was fined $30 million and Aussie Skips $3.5 million after each company pleaded guilty to having agreed to fix and increase prices for supplying rubbish skip bins for building demolition waste in Sydney.
Bingo’s former managing director and CEO was convicted of two criminal cartel offences and sentenced to two years imprisonment, to be served in the community under an intensive correction order including 400 hours of community service, and fined $100,000.
Aussie Skips’ former CEO was sentenced to 18 months imprisonment for one criminal cartel offence, to be served as an intensive correction order including 300 hours of community service, and fined $75,000.
Both men were barred from managing companies for five years.
They could have been sent to jail for up to ten years for cartel offences, but the judge handed down a lighter sentence because they cooperated with investigators and pleaded guilty as soon as their cartel operation was exposed.
Penalties have increased for cartel conduct
Cartel arrangements are a serious crime under Australian consumer law as they reduce competition, resulting in customers paying more. The price fixing agreement by these two companies lasted just three months in 2019, but the consequences under the law were severe.
The cartel operation was exposed when customers complained and investigators found lengthy WhatsApp exchanges discussing fixing prices.
The penalties have become even more severe since the 2019 events involving Bingo Industries and Aussie Skips. Fines for cartel offences increased in 2022 under the Treasury Laws Amendment (More Competition, Better Prices) Act 2022, from a maximum of $10 million to $50 million for companies and from $500,000 to $2.5 million for individuals.
Activities that constitute cartel conduct under law
Business managers should get legal advice on what constitutes cartel conduct.
There are four forms of cartel activity – price fixing, agreeing to share markets, rigging bids and controlling output. (Please see Cartels, ACCC.)
But as long as each business makes independent decisions to match an opponent’s prices or market activity, it will not constitute cartel conduct. (Please see Part IV, Competition and Consumer Act 2010.)
For more information please see Heavy penalties for cartel conduct by roofing companies in NSW.
