InCompetition | penalty units

Penalty units balloon

Published On 26/07/2021 | By Aarthi Sridharan | Cartels, Consumer protection, Enforcement, Litigation

Automatic indexation of penalty units commenced on 1 July 2020.

Commonwealth penalty units increased on 1 July 2020 for the first time in three years. The change was effected by a Notice of Indexation of the Penalty Unit Amount, with the value of the penalty unit increasing to $222. This follows penalty unit increases in 2012 ($110 to $170), 2015 ($170 to $180) and 2017 ($180 to $210) – see our previous post here.

The latest increase, previously set down for 1 July 2018 but delayed by the Crimes Amendment (Penalty Unit) Act 2017, reflects the first automatic indexation of the penalty unit value under section 4AA of the Crimes Act 1914 which prescribes at subsection (3) that: On 1 July 2020 and each third 1 July following that day (an indexation day ), the dollar amount mentioned in subsection (1) is replaced by the amount worked out using the following formula:

Indexation factor for the indexation day x Dollar amount immediately before the indexation day

Many Commonwealth fines are calculated by multiplying the value of a penalty unit (now $222) by the number of penalty units applicable for a particular offence under the relevant legislation. The effect of this automatic increase is that the maximum or applicable penalties for committing such Commonwealth offences and/or contravening provisions have risen and will automatically rise every three years. For example, the amount payable for a Commonwealth offence with a prescribed penalty of 100 penalty units that was committed on or after 1 July 2020, has risen from $21,000 to $22,200.

Penalty units and the Competition and Consumer Act

While many of the penalties imposed under the CCA are not determined by reference to penalty units, some of the offences and breaches under the CCA impacted by penalty unit increases include:

  • The maximum fine for individuals convicted of criminal cartel conduct (offences against sections 45AF or 45AG) has risen. The maximum fine applicable is 2,000 penalty units, the real value of which has risen from $420,000 to $444,000. This fine can be imposed alongside a term of imprisonment not exceeding 10 years.
  • Administrative penalties attaching to Australian Consumer Law infringement penalty notices under section 134C of the CCA (see also our previous post on increased ACL penalties here).

 Penalty units and other Commonwealth legislation

The increase in the value of the penalty unit also has implications for other Commonwealth legislation, including the ASIC Act 2001 and the Income Tax Assessment Act 1936. For example, the ASIC Act provides that the pecuniary penalty applicable to the contravention of a civil penalty provision:

  • by an individual is the greater of 5,000 penalty units (now $1,110,000) or three times the benefit obtained and detriment avoided;
  • by a body corporate is the greater of 50,000 penalty units (now $11,100,000) or three times the benefit obtained and detriment avoided or 10% of annual turnover up to 2.5 million penalty units ($555 million).

 The penalty unit amount is due to be indexed again on 1 July 2023.

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About The Author

is a solicitor in the Sydney office of King & Wood Mallesons where she works in the competition dispute resolution team.

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