ACCC shipping cartel investigation comes to a close with fines totalling AUD$83.5 million

By Thomas Jones, Tom Macken

02-2021

On 4 February 2021, the Federal Court of Australia imposed a fine of $24 million on Norwegian shipping company, Wallenius Wilhelmsen Ocean AS (WWO), for its involvement in a criminal cartel with a number of other shipping companies between 2009 and 2012.

More specifically, the Federal Court found that WWO had intentionally given effect to a cartel provision in its agreements with a number of other shipping companies, including Nippon Yusen Kabushiki Kaisha (NYK) and K-Line, in relation to the transportation of cars, trucks and buses into Australia by which the participants had agreed to allocate between themselves major vehicle manufacturing customers, including on shipping routes to Australia.

According to Justice Wigney of the Federal Court, this cartel arrangement had the capacity to limit or distort the competitive setting of freight rates and ocean shipping services and was also likely to, or at least had the potential to, impact the prices paid by Australian consumers for these vehicles.

Some of the factors which were relevant in the Federal Court’s conviction of WWO included the following:

  • WWO’s conduct was carried out over a lengthy period and was not a one-off;

  • the conduct occurred in a market for services that is of considerable importance to Australia’s economy;

  • the employees that were involved were senior members of the organisation, including the President, Vice-President, Head of Commercial (Europe) and Head of Oceania Trade; and

  • the relevant conduct was covert, deliberate, systematic and involved planning and deliberation.

In terms of the quantum of the fine, Justice Wigney found that WWO’s conduct was of slightly lower severity than those of its counterparts, NYK and K-Line, on the basis that both NYK and K-Line had pleaded guilty to over twenty or more instances of giving effect to a cartel provision, whereas WWO was only found guilty in relation to six such instances.

In light of this, the fine imposed by Justice Wigney on WWO ($24 million) was slightly lower than those imposed on NYK ($25 million) and K-Line ($34.5 million), the latter of which remains the largest criminal fine ordered under Australia’s competition laws.

The case serves as a timely reminder to companies in Australia, or planning to do business in Australia, of the preparedness of Australian courts to take action against those engaging in anti-competitive conduct, particularly cartel conduct.

For more information please contact Thomas Jones or Tom Macken.

 
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