Key takeaways
The Commonwealth Director of Public Prosecutions (CDPP) has dropped all remaining charges in relation to alleged cartel conduct by the joint lead managers in a 2015 ANZ capital raising. The CDPP had already abandoned its charges against ANZ and one of its executives in October 2021. Justice Wigney had previously called the CDPP’s case a “complete shemozzle”.
The ACCC and CDPP have had mixed success with actions under the criminal cartel regime. On one hand, the ACCC and CDPP have secured criminal convictions and a total of $83.5 million in penalties against participants in the car carrier shipping cartel, including a $24 million fine against shipping company Wallenius Wilhelmsen in February 2021. They have also secured guilty pleas from Alkaloids of Australia Pty Ltd and its former Export Manager in relation to charges of cartel conduct in the sales of a pharmaceutical ingredient, and from participants in a money transfer business fixing the Australian dollar/Vietnamese dong exchange rate and fees they charged. HWL Ebsworth acted for the shipping line NYK Line in the shipping cartel and is currently representing Christopher Joyce, the Export Manager of Alkaloids of Australia Pty Ltd.
On the other hand, the dropping of charges in the bank cartel matter is a blow to the ACCC and CDPP. This follows on from their loss in first contested criminal cartel trial earlier this year, in which a jury acquitted The Country Care Group and two of its officers of alleged criminal cartel conduct. HWL Ebsworth acted for The Country Care Group Pty Ltd and its Managing Director, Robert Hogan, in that case. In August 2021, the CDPP also withdrew criminal cartel charges against the CFMEU and its ACT Divisional Branch Secretary.
It will be interesting to see whether these losses affect the cases the ACCC and CDPP pursue and whether the ACCC will pursue more matters as civil cases rather than referring them to the CDPP for criminal prosecution.
Background
The conduct in question related to an ANZ institutional share placement in 2015 in which the joint lead managers, Citigroup, Deutsche Bank and JP Morgan, were left holding a substantial overhang of shares. It was alleged that the joint lead managers were competitors in relation to the disposal of those shares but agreed to coordinate their sell down of the shares in a way that amounted to cartel conduct.
The proceeding has had a tortured journey. In November 2021, Justice Wigney ordered the CDPP to amend “material defects” in its indictment, and criticised numerous repeated setbacks, calling the case a “complete shemozzle”.
The charges were withdrawn by the CDPP, in accordance with the Prosecution Policy of the Commonwealth, following the CDPP determining there were no longer reasonable prospects of success.
ACCC Chair, Rod Sims, stated “we respect the independent decision of the CDPP, and with them will consider what lessons can be learnt from this matter”.
“While there can be challenges involved in bringing criminal cartel prosecutions, particularly due to the complexity of the cartel laws, we will continue our efforts to deter, detect and dismantle cartels, and will continue to refer serious cartel conduct to the CDPP for its consideration. That is our role and we will continue to fulfil it, even though not all briefs of evidence given to the CDPP will result in the laying of charges or convictions,” said Mr Sims.
This is not the first time the ACCC and CDPP have faced challenges prosecuting criminal cartel matters. In August 2021, the CDPP elected to withdraw criminal cartel charges against the CFMEU and its ACT Divisional Branch Secretary. However, in that instance, Mr Sims said, “…the decision to withdraw was made in the context of the extended period of time which has elapsed since the alleged conduct occurred, and the challenges that posed for witnesses’ memories of relevant events”.
Earlier in 2021, HWL Ebsworth successfully represented Country Care Group Pty Ltd and its Managing Director in Australia’s first ever criminal cartel trial by jury. The trial spanned over 13 weeks in the Federal Court; however, it took the jury less than three hours to unanimously acquit the accused of all charges.
What comes next?
It is not normally possible for an accused to recover costs from the prosecution in a criminal trial. However, in a hearing on 11 February 2022, Justice Wigney left open the question of costs, considering the question of whether the CDPP might potentially liable in this case for what would no doubt be a very significant costs bill.
In what has been a defining area of focus for the regulator, Mr Sims maintains that, despite the difficulties of enforcing the criminal cartel laws, cartel conduct and serious criminal conduct is a priority for the regulator.
Mr Sims is set to address the National Press Club on 23 February 2022 to reflect on his time at the ACCC, talk about the challenges to be addressed in a number of areas and address the ACCC’s priorities for 2022.
Mr Sims will finish his term next month, making way for Gina Cass-Gottlieb (previously of Gilbert + Tobin) to take the reins for the next five years. Noting the ACCC’s comments on the complexities of cartel laws and challenges faced in their successful prosecution, it will be interesting to see whether the new Chair takes a different approach to investigating and prosecuting allegations of cartel conduct.
This article was written by Richard Westmoreland, Partner, Luke Callaghan, Senior Associate and Emily Goodfellow, Law Graduate.
