ACCC v Prysmian Cavi E Sistemi S.R.L. (No 13) [2017] FCA 851: Court Imposes Financial Penalty for Cartel Conduct
Tuesday 1 August 2017 @ 9.16 a.m. | Trade & Commerce
In the recent case of ACCC v Prysmian Cavi E Sistemi S.R.L. (No 13) [2017] FCA 851 (28 July 2017), the Federal Court has imposed a pecuniary penalty of $3.5 million against Prysmian Cavi E Sistemi S.R.L. (Prysmian), an Italian corporation, for engaging in cartel conduct in relation to the supply of high voltage land cables in Australia.
The Australian Competition and Consumer Commission (the ACCC) alleged that the conduct involved contraventions of s 45(2) of the Competition and Consumer Act 2010 (Cth) (the Act) with the alleged conduct having occurred in September and October 2003.
See previous TimeBase article relating to cartel conduct by electrical cable suppliers.
Background to the Case
The proceedings brought by the ACCC were instituted against Nexans SA, Prysmian and Viscas Corporation in relation to the price fixing and exclusionary arrangement provisions of the Trade Practices Act 1974 (now the Competition and Consumer Act 2010).
The contravening conduct formed part of an over-arching agreement or understanding between a group of European cable suppliers and a group of Japanese cable suppliers which provided for the allocation of projects around the world.
In 2013, the Federal Court imposed a penalty of $1.35 million against a Japanese cable supplier, Viscas Corporation, for its part in the conduct, following the filing of joint submissions and agreed facts.
In July 2016, the Court found that Prysmian had engaged in cartel conduct but dismissed the ACCC’s case against Nexans SA. The Court found that Prysmian had entered into and given effect to agreements involving price guidance to competitors and project allocation. The contravening conduct related to an Australian project in 2003 to supply high voltage land cables and accessories to the Snowy Mountains Hydro Electric Scheme.
The Current Judgment
In handing down his judgment, Besanko J said at [para 76], with regard to the penalties:
And further at [para 78]:
Sarah Court, the ACCC Commissioner said of the current action:
“This penalty takes into account that, although Prysmian’s conduct was serious and deliberate, it occurred over a relatively short period of time in 2003. As Prysmian did not secure the contract to supply the Snowy Mountains scheme, Snowy Hydro did not suffer a loss from the conduct. However, the ACCC had submitted that a penalty of $7 million was appropriate and we will carefully consider the judgement. Detecting, stopping and deterring domestic and international cartels is a priority for the ACCC. Cartels not only cheat consumers and businesses, they distort competition and restrict healthy economic growth. In 2017 we will be making concerted efforts to ensure that the penalties we seek make larger companies and individuals who work in them consider their business practices, and how their business practices meet their obligations under competition and consumer law.”
Prysmian was a party to an agreement with other cable manufacturers and suppliers to “allocate” the tender to Prysmian and then gave effect to that agreement by providing pricing guidance to its competitors so that they could submit higher amounts in an attempt to ensure that Prysmian won the tender.
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Sources:
ACCC v Prysmian Cavi E Sistemi S.R.L. (No 13) [2017] FCA 851 (28 July 2017)
Prysmian to pay penalty of $3.5m for engaging in cartel conduct – ACCC MR 123/17
