Making Cartel Conduct Criminal: A Case Study of Ambiguity in Controlling Business Behaviour
| DOI | 10.1375/acri.42.2.218 |
| Author | Caron Beaton-Wells,Fiona Haines |
| Published date | 01 August 2009 |
| Date | 01 August 2009 |
| Subject Matter | Articles |
218 THE AUSTRALIAN AND NEW ZEALAND JOURNAL OF CRIMINOLOGY
VOLUME 42 NUMBER 2 2009 PP. 218–243
Address for correspondence: Caron Beaton-Wells, Melbourne Law School, University of
Melbourne, Carlton Victoria 3010, Australia. E-mail: c.beaton-wells@unimelb.edu.au
Making Cartel Conduct Criminal:
A Case Study of Ambiguity in
Controlling Business Behaviour
Caron Beaton-Wells
Melbourne Law School, University of Melbourne, Australia
Fiona Haines
School of Social and Political Sciences, University of Melbourne, Australia
This article explores the regulation of cartel conduct in Australia
focusing, in particular, on the recent decision to criminalise so-called
‘hard-core’ cartels. It illuminates three interdependent ambiguities in
regulating such conduct: economic, moral and legal. The case study is
drawn on to highlight the challenges for the criminal law in attempting to
resolve such ambiguities or tensions as they arise in the regulation of
business behaviour generally.We argue that such challenges exist because
the ambiguities reflect broader shifts taking place on an ongoing basis in
economic policy, political ideology and social norms in Australian society.
For many criminologists, cartel conduct is the result of business greed and malfea-
sance. Clandestine arrangements between competitors designed to subvert competi-
tion and extract excessive profits are a classic example of crimes of the powerful
(Freidrichs, 1996; Pearce & Tombs, 1990; Rostoff, Pontell, Henry, & Tillman, 2003),
perpetrated by senior executives and their corporations to benefit at public expense.
On this account, cartel conduct could be seen as unequivocally immoral and recent
efforts by governments, including here in Australia, to punish it more severely as
welcome. We argue in this article, however, that simply to laud these attempts as
progress in the fight against corporate excess overlooks the tensions and complexities
in the conduct itself and the substantial challenges facing the law, and the criminal
law in particular, in controlling the behaviour of the powerful.
This article is a case study of the regulation of cartel conduct in Australia. While
ambiguities in the definition of cartel conduct lie at the heart of the article, it may be
useful to provide a general characterisation of such conduct at the outset. In essence,
cartels involve arrangements between competitors in which they commit to act in a
coordinated way with a view to subverting or removing the usual operation of competi-
tive forces in the marketplace. A recent high-profile example of such conduct in
Australia was the arrangement between the two cardboard manufacturing giants, Visy
and Amcor, not to deal with each other’s customers and thereby maintain their
respective market shares, while also fixing annual increases in the prices that they
charged those customers (Beaton-Wells & Brydges, 2008).
The purpose of this article is to critically assess the regulatory response to cartel
conduct in Australia and, in particular, the move to criminalise what may be charac-
terised as the most serious forms of collusion between competitors, as exemplified by
the Visy case. Recent events in the process of criminalisation include the ambivalent
approach by the former conservative government between 2003 and late 2007 when
it was voted out of office, followed by the release of an Exposure Draft Bill by the
newly elected Labor government in January 2008. A revised Exposure Draft Bill was
released in October 2008 and, in keeping with its election promise to take legislative
action by the end of the year, the Trade Practices Amendment (Cartel Conduct and
Other Measures) Bill 2008 was introduced to Parliament on 3 December 2008.1Passed
in June 2009, this Act makes it an offence for two or more competitors to make a
contract, arrangement or understanding that contains a cartel provision, or give effect
to a cartel provision, such a provision being one that involves fixing prices, restricting
output, allocating customers or territories or rigging bids.2Corporations and individu-
als may be liable for such cartel offences and significant fines as well as, for individu-
als, a maximum jail term of 10 years applies.
This article draws inspiration from the work of Aubert (1952) in focusing on the
ambiguities that characterise cartel criminalisation in Australia. In the context of
cartel conduct, we argue that there are three interdependent tensions, conflicts or
complexities underlying these ambiguities: economic, moral and legal. Rather than
attempt to resolve such ambiguities, in order to clarify what exact behaviour should
be criminalised, we argue that key insights into the challenges inherent in control-
ling business behaviour through the criminal law can be explored by examining the
ambiguities themselves (consistent with the argument in Haines & Sutton, 2003).
Further, this examination reveals significant shifts taking place in broader
Australian society and politics as competition becomes adopted as inherently in the
public interest, replacing earlier assumptions around the benefits of the welfare state
(for Labor) or of industry per se (for the conservative side of politics).
Ambiguities in Cartel Criminalisation
Economic
Most competition lawyers would acknowledge that there is ambivalence in relation
to the impact of cartel conduct on the functioning and performance of the economy
and, ultimately, on consumer welfare. This ambiguity is reflected in the different
meanings or connotations traditionally associated with the concept of a ‘cartel’. As
Harding and Joshua (2003, pp. 13–14) have pointed out, historically, the idea of a
cartel connoted a form of truce between rivals in the interests of a common good. In
the business sense, this involved cooperation between rivals, often in defensive
mode, responding to economic disruption or crisis and with a view to stabilising
economic conditions. Only relatively recently has the concept of a cartel been used
pejoratively to convey a harmful and even sinister or delinquent form of activity in
which firms secretively suspend competition to advance their own self-interest at
the expense of others (Spar, 1994, p. 2). However, within this general frame of
reference, until very recently there has been minimal specific legal content to the
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MAKING CARTEL CONDUCT CRIMINAL
THE AUSTRALIAN AND NEW ZEALAND JOURNAL OF CRIMINOLOGY
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