Scaffold for criminal charges fails

Published On 20/08/2021 | By Stephanie Swan | Cartels, Enforcement, Litigation

On 17 August 2021, the Commonwealth Director of Public Prosecutions (CDPP) withdrew criminal cartel charges against the Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) and its Australian Capital Territory (ACT) Divisional Branch Secretary, Mr Jason O’Mara. Combined with the acquittals in the Country Care case and recent developments in the banking cartel case, this prompts reflection on the pursuit of criminal proceedings to deter companies, their executives and employees from engaging in cartel conduct.

Background

From July 2014, allegations of potentially anti-competitive conduct by CFMMEU officials were aired before the Royal Commission into Trade Union and Governance and Corruption. The Commission’s final report was released in December 2015. It noted that, at the conclusion of the hearings, the ACCC announced that it had commenced making enquiries into cartel conduct in the building industry in the ACT. Therefore, while these allegations were examined, no findings were made because of the ongoing ACCC investigation and the possibility that further factual material might emerge.

In August 2018, the CDPP laid criminal charges against the CFMMEU and Mr O’Mara. The charges followed a joint investigation by the ACCC and Australian Federal Police, and related to attempts to induce suppliers of scaffolding and steelfixing services to reach arrangements or understandings containing cartel provisions in relation to services provided to builders in the ACT in 2012 and 2013.

Decision to withdraw

According to ACCC Chair Rod Sims, the federal prosecutor’s “decision to withdraw [the charges against CFMMEU and Mr O’Mara] 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”. The Prosecution Policy of the Commonwealth relevantly provides (among other things) that:

  • cases should be kept under continuous review;
  • when evaluating the available evidence, regard should be given to whether the witness’ memory is faulty or the witness is otherwise unreliable; and
  • in determining whether the public interest requires a prosecution, the passage of time since the alleged offence is a relevant factor.

The CDPP’s decision to withdraw the charges in relation to allegations involving scaffolding services follows the CDPP’s decision in February 2021 to withdraw similar charges in relation to allegations involving steelfixing services.

Not the first, and not the last…

Only one day later (on 18 August 2021), in relation to the banking cartel case, it was reported that the CDPP has also decided to drop all criminal cartel charges against former Citigroup country head, Mr Stephen Roberts. The prosecution was also reported to have substantially reduced those charges faced by five other individuals and their employers who were underwriting the share placement. Indeed, less than two months earlier (in June 2021), a jury in the Federal Court acquitted Country Care, its CEO and a former employee of eight criminal cartel offences that related to attempted price-fixing and bid-rigging.

Will these events lead to some pause for reflection for both the ACCC and CDPP? Will the ACCC prefer to continue testing and developing the law through civil proceedings which result in written reasons for the decisions, rather than criminal convictions with limited precedential value? Should the ACCC think twice before referring matters to the CDPP – trading potential prison sentences for the quicker and more certain format that comes with civil proceedings (and probably improving its chance of success, including any practical deterrent effect)? Prison may be a greater deterrent than a fine, in theory – but arguably, in practice, this only eventuates if the CDPP run the case to trial and the jury is on their side.

Of course, there have previously been successful criminal prosecutions of cartels affecting Australian consumers: see our earlier blogs here and here. However, the evidentiary bar and procedural rigour of a criminal prosecution is significantly more onerous than in a civil context. For that reason, it remains to be seen whether the ACCC’s investigative capabilities in this regard, and its work with the CDPP in pursuing matters criminally, will result in the ACCC more successfully achieving meaningful outcomes with a deterrent effect.

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About The Author

is a Solicitor in the Melbourne office of King & Wood Mallesons.

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