The Folly of Criminalising Cartels - The Centre for Independent Studies
Donate today!
Your support will help build a better future.
Your Donation at WorkDonate Now

The Folly of Criminalising Cartels

CRIMINALISING CARTELS IS UNPRODUCTIVE

The government should reconsider the introduction of criminal penalties for cartelisation, says a new report being released on Wednesday.

The federal government proposes to introduce a maximum jail term of 10 years for individuals found guilty of serious cartel conduct because it thinks that existing civil penalties alone cannot adequately deter cartel formation. This is a mistake, says a new report The Folly of Criminalising Cartels published by the Centre for Independent Studies.

The report’s author Jason Soon refutes the claim that cartels are so economically damaging as to merit harsher penalties.

‘It is often asserted that cartelisation is morally equivalent to theft or fraud, yet some long-term cooperative agreements between firms are not only tolerated under the law, but recognised as being of public benefit,’ says Soon.

‘Recent post-mortems of successful cartel prosecutions have not found that the market reaped any benefits in terms of lower prices after prosecution,’ says Soon.

Given the fragile and unstable nature of cartels, measures to introduce criminal penalties for cartelisation are like cracking open a nut with a sledgehammer.

‘Existing penalties for cartels include fines of a maximum of $10 million, up to 10 percent of a cartelist’s annual turnover, or three times the gains to the cartel, whichever is higher, and were only recently increased from a mere maximum of $10 million. It is a trivialisation of current penalties to dismiss them as a mere cost of doing business,’ says Soon.

‘The chances of a cartel being detected are higher now with whistleblower programs such as the Immunity Policy used by the ACCC, which grants immunity from prosecution for corporations and individuals who are the first to ‘squeal’ on a cartel.’

The embargoed report is available at https://www.cis.org.au/issue_analysis/IA111/IA111.pdf

Jason Soon is an economist and Visiting Fellow at the Centre for Independent Studies.
He is available for comment.

All media enquiries:
Leonie Phillips
Ph: 02 9438 4377
Mob: 0403 063 852
Email: