ACCC Investigation Leads to Cartel Conduct Charges Being Laid Against Banks

Friday 8 June 2018 @ 10.31 a.m. | Crime | Legal Research | Trade & Commerce

In a recent ACCC Media Release, the Australian Competition and Consumer Commission (the “ACCC”) revealed that following an investigation, charges of criminal cartel conduct have been laid against Citigroup Global Markets Australia Pty Limited (Citigroup), Deutsche Bank Aktiengesellschaft (Deutsche Bank) and the Australia and New Zealand Banking Group Ltd (ANZ).

It also reports that criminal charges have also been laid against several senior bank executives. 


The charges involve alleged cartel arrangements relating to trading in ANZ shares held by Deutsche Bank and Citigroup. ANZ and each of the individuals are alleged to have been knowingly concerned in some or all of the alleged conduct after the share placement. The cartel conduct is alleged to have taken place following an ANZ institutional share placement in August 2015.

According to Business Insider Australia, the case centres on ANZ’s Institutional Equity Placement of 80.8 million shares at $30.95 each in August 2015 and the lack of disclosure that 25.5 million of these went to two of the three joint lead managers - around 30 per cent of the shares (some 25.5 million worth $789.2 million) were unallocated during the raise.

Reaction from the ACCC

In a recent ACCC Media Release, Rod Sims (ACCC Chairman) said of this matter:

“These serious charges are the result of an ACCC investigation that has been running for more than two years. Charges have now been laid by the Commonwealth Director of Public Prosecutions [CDPP] and the matter will be determined by the Court.”

In February 2018, ACCC chairman Rod Sims launched the ACCC’s 2018 Compliance and Enforcement Policy, putting cartel behaviour back on the agenda in Australia.

In his annual Committee for Economic Development of Australia (CEDA) address on 20 February 2018, Mr Sims reflected on cartel prosecutions during 2017:

“… 2017 also saw just the second criminal cartel prosecution in Australia for cartel conduct – more than 100 years after the first, the Coal Vend case in 1908. This marks a significant step forward in the ACCC's investigations and approach to this form of corporate misconduct … A significant milestone was reached last year [2017] in the High Court ruling unanimously in favour of the ACCC to conclude that Air New Zealand and Garuda Indonesia were engaged in this long-standing international cartel.”

Response from the Banks

Business Insider also reports that ANZ, Deutsche Bank and Citigroup intend to defend the charges. JPMorgan, the other lead manager, is reportedly co-operating with ACCC.

Deutsche Bank said in a statement:

“Deutsche Bank reiterates that it believes it and its staff, including two former staff members Michael Ormaechea and Michael Richardson, acted responsibly, in the interests of clients and in a manner consistent with the Corporations Act and ASIC Market Integrity Rules in relation to ANZ’s institutional share placement in August 2015. Both Michael Ormaechea and Michael Richardson are highly regarded and have our full support. We will vigorously defend charges brought by the CDPP and the ACCC.”

A spokesperson for Citigroup commented:

“Citi will vigorously defend these allegations on behalf of itself and its employees.”

Kevin Corbally, ANZ Chief Risk Officer said:

“We believe ANZ acted in accordance with the law in relation to the placement and on that basis the bank intends to defend both the company and our employee.”

Potential Penalties

Under the Competition and Consumer Act 2010 (Cth), individuals who are found guilty face up to 10 years in gaol and/or fines of up to $420,000 per criminal cartel offence, with institutions facing fines of up to $10 million per offence.

Previous Cartel Action by the ACCC

The ACCC reports in a Media Release of 5 April 2018, that Kawasaki Kisen Kaisha (“K-Line”) - a global shipping company based in Japan - entered a guilty plea in the Federal Court of Australia (the “Federal Court”) to criminal cartel conduct. K-Line’s plea follows an investigation by the ACCC and charges laid by the CDPP in relation to cartel conduct concerning the international shipping of cars, trucks, and buses to Australia. 

A Media Release of 31 July 2017 reveals that the Federal Court imposed a pecuniary penalty of $3.5 million against Italian corporation Prysmian Cavi E Sistemi S.R.L. (“Prysmian”), who engaged in cartel conduct in relation to the supply of high voltage land cables in Australia. See previous TimeBase article for more on Cartel Conduct.

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products. Nothing on this website should be construed as legal advice and does not substitute for the advice of competent legal counsel.


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