Cartel Update: First criminal cartel jail sentence handed down by Federal Court of Australia

The Federal Court of Australia has affirmed its position that any cartel conduct, as prohibited by the Competition and Consumer Act 2010 (Cth) (CCA), will be treated extremely seriously by the Courts and that in addition to companies involved in such behaviour being prosecuted and fined, that the Courts have every intention to hold individual directors or employees criminally accountable, where they become knowingly concerned with conduct in contravention of section 79(1) of the CCA.

This Federal Court of Australia has handed down the first ever prison sentences against individual representatives for criminal cartel contraventions of section 44ZZRG of the CCA, including provisions aimed at individuals attempting to induce, procure or conspire with others to contravene cartel provisions of the CCA.

The Federal Court prosecutions followed an investigation by the Australian Competition and Consumer Commission (ACCC) and the Australian Federal Police (AFP) into fees charged and exchange rate transactions facilitated by Vina Money Transfer Pty Ltd (Vina Money) and its competitors, Hong Vina Fast Money Transfer (Hong Vina) and Easter & Allied Pty Ltd t/a Hai Hai Money Transfer (Hai Ha) between 2011 and 2016. The transactions that were subject of the prosecution were facilitated via the arrangement of two categories of contracts, arrangements or understandings (CAUs) containing cartel provisions, including:

1. Exchange Rate CAUs in which Vina Money, Hong Vina and Hai Ha agreed a common exchange rates for currency exchanged between Australian Dollar (AUD) / Vietnamese Dong (VND); and
2. Fee Discount CAUs, in which Vina Money, Hong Vina and Hai Ha agreed common prices for services, including an agreement to stop applying fee discounts on money remittances to Vietnam.

In addition to charging Vina Money with offences giving effect to cartel provision within the CAUs, the Commonwealth Director of Public Prosecutions also brought charges against Ngoc Le, Khai Tran, Tony Le and Thi Huong Nguen, who acted as representatives of Vina Money and its competitors (together the Representatives).

Vina Money and the Representatives all pleaded guilty to breaches of s 44ZRG of the CCA in contravention of section 79(1) of the CCA, on the basis that they facilitated the CAUs.

In their antecedence, the Representatives noted that Vina Money was originally encouraged to agree a common exchange rate with its competitors by Sacombank, which worked with all three businesses and had observed volatility within the exchange rates. Following this intervention, the Representatives who were acting in the capacity of directors, employees and/or agents of Vina Money and its competitors, agreed the CAUs.

The Court found that the cartel conduct was facilitated via engagement in the CAUs, which were intended to give effect to fixing of exchange rates and fees and that the conduct amounted to anti-competitive cartel conduct for financial benefit. Justice Abraham commented that communications (which included SMS communications) between the Representatives were extensive and frequent and gave effect to the provisions of the CAUs.

In sentencing, the Court took account of the guilty pleas (including timing) of the individual Representatives in relation to contraventions of the cartel provisions of the CCA, and characterised the offences to be in the low to moderate range of offending in which the parties knowingly gave effect to the CAUs for financial gain.

Justice Abraham in her judgment was clear that she considered this behaviour anti-competitive and very serious in nature, as:

1. The conduct was directed to financial benefit
2. The business (despite its size) occupied approximately 2/3 majority of the currency exchange market between Australia and Vietnam, with the conduct covering ~$2.5 billion of trades over a 5 year period; and

Vina Money was fined $1,000,000 for its conduct, and prison sentences of between 9 months and 2.5 years were imposed on the Representatives involved in the conduct,

for knowingly engaging in behaviour giving effect to the cartel conduct

Justice Abraham emphasised that such conduct was serious and criminal in nature, constituted cartel conduct and that that the sentences imposed on the four individuals was reflective of this.

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Authored by: 
Freda Zacharia, Senior Associate