Justice Lindgren in the Federal Court, Sydney, today considered a proposed settlement of proceedings instituted by the Australian Competition and Consumer Commission against three animal vitamin suppliers for alleged price fixing and market sharing in contravention of the Trade Practices Act 1974.
The respondents are Roche Vitamins Australia Pty Ltd, BASF Australia Limited, and Aventis Animal Nutrition Pty Ltd, formerly known as Rhone-Poulenc Animal Nutrition Pty Ltd.
The respondents fully cooperated with the ACCC's investigation which led to these proceedings being instituted, with the only issue before the Court being the appropriate orders to be made to resolve the matter, including the appropriate penalties to be imposed against the respondents. As part of the proposal to settle the matter, the ACCC and the respondents reached agreement as to the appropriate penalties to be recommended to the Court, namely $15 million for RVA, $7.5 million for BAL, and $3.5 million for AAN.
The ACCC and the respondents, however, recognise that their agreement as to these penalties is only a recommendation to assist the Court in making its own assessment of the amount of penalties to be imposed. It is for the Court to determine and impose the appropriate penalties, having regard to all the circumstances of the case.
In the submissions to the Court, the ACCC has alleged that price fixing and market sharing arrangements in contravention of the Trade Practices Act 1974 had existed between the three respondents for the supply in Australia of animal vitamins A and E and of premix containing these vitamins in the period from mid-1994 to 1996 and continued between RVA and BAL in the period 1997 to 1998. Animal vitamins A and E are the major vitamins used in animal feeds in the poultry, swine and ruminant industries. The ACCC wishes to emphasise that no other Australian vitamin companies, such as Blackmores, were involved in these alleged arrangements.
The penalties being recommended to the Court in the case of RVA and BAL are higher than any penalties imposed by the Court in the history of trade practices proceedings in Australia. In the case of RVA, the penalty being recommended is more than double the highest penalty previously awarded against a corporation for a contravention of the Act (namely, $6.6 million against each of the three corporate respondents in the Pioneer Concrete price- fixing and market-sharing case in 1995 – namely Pioneer, CSR and Boral – at a total cost of $21 million).
The ACCC's investigation into these cartel arrangements in Australia followed the announcement by the US Department of Justice last year of similar US proceedings against F. Hoffmann-La Roche Limited, an affiliate of Roche Vitamins Australia Pty Ltd, and against BASF Aktiengesellschaft, a related corporation of BASF Australia Limited. The ACCC's investigations revealed that arrangements were entered into between F. Hoffmann-La Roche Limited, BASF Aktiengesellschaft, and Aventis Animal Nutrition SA (formerly known as Rhone-Poulenc Animal Nutrition SA), for the purpose of sharing the market and fixing the prices for the supply of animal vitamins A and E in various parts of the world including Australia.
In the submissions to the Court, the ACCC alleged that the arrangements in Australia involved meetings and telephone conversations between the respondents on a regular basis during which agreements were reached concerning the prices at which the companies would sell animal vitamins A and E in Australia and the allocation of some tenders for some major customers.
"The ACCC's position in this case demonstrates that leniency towards individual executives in some circumstances may be appropriate as an incentive to others to cooperate fully with the ACCC", ACCC Chairman, Professor Allan Fels, said today.
"With increasing international trade liberalisation, it is becoming even more important that the benefits of international competition are not stymied by international cartel arrangements.
"As to the present case, I commend the decision by the animal vitamin companies to reach agreement with the ACCC over the issues in the proceedings and thereby to avoid a long and costly trial".
Justice Lindgren has reserved his judgment.