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Australia’s penalties are low when it comes to competition

Tuesday 27 March 2018

The Organisation for Economic Cooperation and Development (OECD) 
found that Australia has lower penalties in comparison with other member states, especially for large firms and anti-competitive behaviour.

These are the findings in the recently-released report, Pecuniary Penalties for Competition Law Infringements in Australia 2018.

“The ACCC has been concerned that penalties in competition cases, historically, have not been sufficiently high to deter breaches, especially in cases involving large businesses. Whilst the OECD’s report focusses on penalties in competition cases, the ACCC is similarly concerned to ensure that penalties imposed in consumer cases are also high enough to achieve deterrence,” ACCC Chairman, Rob Sims, said.

Sims emphasised that he does not want breaches in Australian consumer law to be seen by big business as an acceptable cost of doing business. This means establishing penalties with sufficient weight to be noticed by the major stakeholders in companies.

The report indicated that the penalties in Australia would have to be raised 12.6 times to be comparable with other OECD countries.

The report continued that while most OECD countries penalties were set according to an established methodology, locally, penalties are decided by the federal court.


The ACCC’s new approach
Sims said the competition regulator will consider two methods:
  1. Establishing base fines that would then avoid low fines and penalties that do not achieve the effect of deterrence.
  2. Public guidance that establishes a level of openness but also a measure predictability between sanctions and deterrence.

“To achieve deterrence, Australia needs higher penalties for breaches of the competition laws by larger companies. To achieve this, the ACCC needs to rethink its approach,” Sims said.