ACCC v Yazaki Corporation [2018] FCAFC 73: Court Increases Penalties for Cartel Conduct

In the recent case of ACCC v Yazaki Corporation [2018] FCAFC 73 (16 May 2018) the Full Federal Court has ordered Japanese company Yazaki Corporation (“Yazaki”) to pay increased penalties of $46m for cartel conduct. The latest action was a result of an appeal which was commenced in May 2017 by the Australian Competition and Consumer Commission (the “ACCC”).

For more information, see  TimeBase's previous article regarding this case.

Background

During December 2012, the ACCC launched proceedings against Yazaki and Australian Arrow for alleged cartel conduct regarding collusive conduct with its competitor in the supply of wire harnesses to Toyota Motor Corporation (“Toyota”). The verdict was handed down in November 2015 and the original decision, which included a $9.5 million dollar fine, was delivered in May 2017.

The ACCC lodged an appeal within a week of the verdict, with Yazaki then cross-appealing against the judgment that it engaged in cartel conduct.

The Judgment

While most of the collusive conduct took place in Japan, the ACCC argued that Yazaki was subject to local laws because it was conducting business in Australia.  It followed similar enforcement action against Yazaki and other cartel participants by competition regulators in the US, Canada, and Japan.

Commenting on the respondent’s behaviour in this current case, their Honours noted [at para 253]:

“… Yazaki’s conduct was 'deliberate, sophisticated and devious': see [49] and [88] of the relief judgment. It included the manipulation of the prices and the components of the prices so as to avoid arousing suspicion: see [88] of the relief judgment. The trial judge described Yazaki’s conduct as 'serious', or 'hard-core' cartel conduct … The conduct gave effect to a longstanding and broader anti-competitive agreement since at least the mid-1990s: see [51] and [88] of the relief judgment.”

In his May 2017 judgment (see ACCC v v Yazaki Corporation (No 3) [2017] FCA 465 (9 May 2017)) Besanko J said of that action [para 42]:

“I have not found the issue an easy one to resolve …”

Response from the ACCC

ACCC Chairman Rod Sims said in an ACCC Media Release:

“The ACCC welcomes the $46 million in penalties ordered against Yazaki, which is the highest penalty amount ever imposed under the Competition and Consumer Act 2010 (Cth). We appealed the penalties imposed by the trial judge because we considered that the original penalties of $9.5 million were insufficient to adequately deter Yazaki or other businesses from engaging in cartel conduct in the future.”

Mr Sims said that during the initial penalty hearing, the ACCC submitted to the court that a total penalty of between $42m and $55m would be of appropriate deterrent value, taking into account the serious nature of Yazaki’s actions and the size of their global operations.

Commenting on fines imposed by Australian courts for cartel conduct, the ACCC Chairman said:

“Cartel conduct is illegal because it not only cheats consumers and other businesses, it also restricts healthy economic growth. For this reason, it is of considerable importance that penalties imposed by the Courts are large enough to act as a sufficient deterrent to prevent companies and their employees contravening Australia’s competition laws. The ACCC is continuing to seek penalties which are high enough to deter anti-competitive conduct, particularly by large national and multi-national corporations.”

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