Education Before Enforcement? Key Insights From Australian Cartel Research

Caron Beaton-Wells, Christine Parker, Oct 15, 2012

Close scrutiny and tough sanctioning of cartel conduct (involving price-fixing, market sharing, output reduction, or bid-rigging by competing businesses) have been a focus of competition law and enforcement across the globe for the last decade and a half. A growing number of countries have criminalized or are contemplating criminalization of this type of conduct. Criminal treatment is based on the view that cartels represent a widespread and potent threat to competition and hence to domestic and global economic welfare. The economic rationale for a penal approach has been accompanied by strong moral rhetoric by enforcement officials, tarnishing cartelists as cheats and thieves.

Australia’s introduction of cartel offenses and criminal sanctions in 2009 is consistent with this international trend. At the same time it represents a significant shift in the approach taken to regulating cartel conduct in this country. The shift is from a fairly benign regime involving civil penalties imposed at relatively low levels, to a heavy-handed one threatening the stigma of conviction and a jail sentence of up to ten years.

Consistent with the position taken by criminalization advocates world-wide, the Australian reform was justified on the grounds that having a criminal regime is the most effective way to deter cartel conduct (through the fear of criminal sanctions-principally jail) and induce compliance (through the stigmatizing effe…

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