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Gilsenan, Rebecca --- "Barriers to cartel class actions" [2015] PrecedentAULA 50; (2015) 129 Precedent 33


By Rebecca Gilsenan

Private enforcement of competition laws through class actions in Australia has been rare, but has increasingly taken the form of class actions on behalf of the victims of price-fixing, bid-rigging, market-sharing and output restrictions (‘cartel conduct’) who are seeking to recover compensation for their losses. The rarity of these actions contrasts with the vigorous public enforcement by the Australian Competition and Consumer Commission (ACCC) and overseas regulators in relation to cartel conduct, and the fact that private enforcement class actions in relation to cartels are very common in the United States. In Australia, private enforcement action, especially in the form of a class action, is expensive, complex, slow and difficult to conclude. For all but the wealthiest of companies, private enforcement action to recover losses caused by cartels is inaccessible. Even in the context of class actions, where litigants can band together to share in the cost of private enforcement action and may be able to access litigation funding to facilitate it, the legal costs are disproportionately high and are likely to be prohibitive to future actions.

Private enforcement ought to be encouraged because it provides compensation to the victims of cartel conduct; it increases deterrence of cartel conduct by requiring cartelists to pay back their ill-gotten gains; it is not publicly funded and, for all of these reasons, it strengthens the effect of competition laws. Although the ACCC has had power since 2001 to bring a class action under s87(1B) of the Competition and Consumer Act 2010 (Cth) (CCA) and seek compensation on behalf of persons who have suffered loss as a result of cartel conduct, that power has never been used by the ACCC in respect of a contravention of the competition provisions.[1]

Private enforcement enables the regulator to concentrate on public enforcement and relieves it of the need to exercise its powers to obtain compensation for victims of cartel conduct. By providing redress to victims and by stretching the effect of the regulatory dollar, private enforcement can play an important role in fulfilling the objects of competition laws: promoting competition and enhancing consumer welfare. There is obviously a gap between frequent public enforcement activity by the ACCC and the rare private damages actions. This suggests that many victims of cartels go uncompensated and cartelists are likely to be enjoying profits as a result of their activities, even after paying fines.

Part IVA of the Federal Court of Australia Act 1976 (Cth) (FCA Act) was introduced in 1992 to provide a mechanism for representative proceedings. Professor Morabito’s empirical study of Australian class actions regimes found that in the first 22 years of operation of the Federal Court of Australia’s class action regime, 329 class actions (Part IVA proceedings) were filed, of which just 5 (or 1.5 per cent) were cartel claims.[2]

The first cartel class action to be brought under the regime, in relation to the pre-mixed concrete industry, was filed in 1996.[3] Less than a year later, the Federal Court made an order under s33N of the FCA Act that the proceeding not continue as a representative proceeding, and it was ultimately dismissed by consent in 2000. The first proceeding to be resolved under the regime, in relation to an international vitamins price-fixing cartel,[4] was commenced in 1999 and finalised in 2006, 14 years after the introduction of the regime. The next cartel class action to be filed in Australia alleged price-fixing and market-rigging in the corrugated fibreboard packaging (CFP) industry.[5] That case was filed in April 2006 and resolved by settlement on the eve of the trial in May 2011. The Air Cargo class action[6] was commenced in January 2007 and resolved by settlement in June 2014. The Rubber Chemicals class action was commenced in September 2007 and settled in 2011.[7] No cartel class actions have been commenced since 2007.


The cartel class actions brought to date have faced significant challenges. Each of the four cartel class actions brought after the 1996 Pioneer Concrete case was long running. Professor Morabito’s report found that the average duration of all the Part IVA proceedings filed on or before 3 March 2014 that were resolved, as at 1 October 2014, was 730 days (exactly 24 months), while the median duration was 570 days (over 18 months).[8] The average duration of the four cartel class actions was close to six years. Despite their long duration, the only one that reached the trial stage was the CFP class action.

The cases were beset by protracted interlocutory disputes about pleadings, access to regulator documents and work product, the scope of discovery, and jurisdiction and related issues such as ministerial consent to rely on extra-territorial conduct. These issues were in addition to the fundamental challenge of proving conduct that is, by nature, covert; the uncertainty that arises in relation to limitation periods where contravening conduct is covert and may not be discovered until some years after it has started, and the uncertainty in relation to how admissions of contraventions elsewhere might be used in a private enforcement action. Further challenges relate to proving and quantifying loss, including having to undertake the complex, expensive econometric task of proving loss by constructing a but-for world of prices in the absence of collusion, which is compounded by the fact that no Australian court has made a determination as to the appropriate method or methods by which the loss caused by price-fixing is measured; how to handle the issue of ‘passing through’ losses in the supply chain and the absence of any ‘cy pres’ remedies which would facilitate the distribution of quantified losses where it is not possible to specifically identify victims. These challenges are not all unique to cartel class actions. Some could arise in any class action and some could arise in a regulatory prosecution or an individual damages claim following cartel conduct. In cartel class actions, the difficulties are compounded by the high stakes nature of the litigation and procedural complexities that are unique to class actions.

The recent extensive review of Australian competition policy, laws and institutions chaired by Professor Ian Harper (Harper Review) examined some of the areas that have created challenges for cartel class actions. The Harper Review acknowledged that private enforcement of competition laws is an important right and that there are many regulatory and practical impediments to exercising that right.[9] The final report was released on 15 March 2015 and the relevant recommendations, if implemented, will alleviate some of the difficulties. These include recommendations regarding the use to which findings under s83 of the CCA should be able to be put, and in relation to extra-territorial conduct.


One of the most frustrating issues faced by the applicant in a cartel class action is the uncertainty regarding the operation of s83 of the CCA, which is intended to reduce the costs of private enforcement.

Section 83 relevantly provides that in a proceeding for relief under ss82 or 87(1A), a finding of any fact by a court made in proceedings for an offence against s44ZZRF or 44ZZRG is prima facie evidence of that fact, and the finding may be proved by production of a document under the seal of the court from which the finding appears.

A limitation on the usefulness of s83 for private litigants is that ‘finding of fact’ may be interpreted as meaning ‘a finding of fact after the hearing of a matter’, rather than a finding by consent of the parties.[10] In Australian Competition and Consumer Commission v Apollo Optical (Aust) Pty Ltd (2001),[11] even though the respondent consented to the making of s83 findings, the court was concerned about making them in circumstances where there was no tested evidence. Likewise, formal admissions may not be regarded as findings of fact.[12]

Public enforcement actions in relation to cartel conduct are often resolved by defendants making admissions of contraventions. Therefore, in practice, the limitation is a real impediment. It is neither a fair nor an efficient use of public and private resources for private litigants to have to relitigate facts that are admitted or otherwise established in proceedings brought by the ACCC. In the CFP class action, for example, private litigants incurred $25 million in costs in circumstances where a substantial portion of those costs were attributable to the need to prove conduct that had already been admitted elsewhere.

Opponents of reform in this area argue that extending s83 to admissions of fact will discourage parties to co-operate and settle with the ACCC, which would compromise the effectiveness and increase the cost of public enforcement.

While this is a matter of balancing conflicting policy imperatives, the interests of private litigants ought to be given greater weight than is currently the case. Consistent with this, the Harper Review recognised that the effectiveness of s83, as a means of reducing the costs of private actions, would be enhanced if it were extended to admissions of fact in addition to findings of fact made by a court, and has recommended that it be so extended.[13] The ACCC has recently stated that it supports this recommendation.[14]


A closely related problem concerns access to information and documents held by the ACCC in relation to a breach or possible breach of the cartel offence and civil penalty provisions. Regrettably, this area was not the subject of recommendations by the Harper Review.

Under s157C of the CCA, the ACCC cannot be required to make discovery of documents or produce documents containing Protected Cartel Information (PCI) in proceedings where it is not a party. Where the ACCC or a court receives a request from a party to court proceedings for discovery or for production of documents containing PCI, the ACCC or the court need have regard only to a finite list of considerations, all of which weigh against production and disclosure, and must not have regard to matters beyond the list.

This approach, which was introduced by amendments to the CCA in July 2009, is too broad. Although it is untested, which is perhaps not surprising given its terms, it is very likely to reduce the ability of victims to obtain compensation efficiently or at all. This is because witness statements, transcripts of compulsory examinations and other material compiled by the ACCC may be critical to the success of private enforcement action.

The decisions of the Federal Court in the lead up to the introduction of the PCI regime indicated an increasing preparedness to grant access to information and work product in the hands of the ACCC to third-party litigants.[15] In Cadbury Schweppes v Amcor, in overruling the ACCC’s claim for public interest immunity from production of certain materials, Justice Gordon said:

‘there is at least an equal, if not more compelling, public interest in allowing private litigants to rely on the output of regulatory investigations, which are undertaken by public regulators at least in part on their behalf. The ACCC should be ‘motivated by a desire to do its duty, both towards the public and towards individual investors’. It is not motivated by corporate profit motives or competitive concerns.’[16]

The ACCC’s desire not to see its investigative and immunity processes compromised has produced overbroad legislation which is out of step with the more generous approach to access to documents and information by third-party litigants in the United States and Europe.[17] Even after an investigation has concluded and, for example, a settlement has been reached between the ACCC and the cartelists, private litigants may be denied access to information which would greatly assist them to recover their losses suffered by reason of the same conduct.

The limited considerations to which the Commission and a court or tribunal may have regard under the PCI scheme do not give weight to the purpose for which the documents are sought, and therefore prevent a decision being made upon a proper balancing of interests. In contrast, there are well-established principles at general law for dealing with claims for public interest immunity, under which all competing public interests are taken into account, which applied prior to the introduction of the PCI regime.


Contemporary commerce increasingly occurs on a transnational basis, with global enterprises structured through a network of related but separate corporate entities in different countries. The same is true for cartel conduct. Of the five cartel class actions brought to date, the Vitamins, Air Cargo, Rubber Chemicals cases were based on transnational conduct. Also, fines were imposed on Visy in New Zealand in relation to cartel conduct by Visy and Amcor in the supply of CFP in New Zealand.

Transnational cartels involve additional challenges for enforcement.[18] The Harper Review recognised that there are two impediments to private enforcement in respect of contravening conduct that occurs overseas: the business residence test and the need to obtain ministerial consent.[19]

Section 5(1) of the CCA provides for limited extraterritorial application of Part IV to conduct outside Australia by firms ‘incorporated or carrying on business within Australia’. It is axiomatic that domestically incorporated firms can expect to be subject to Australian law and the jurisdiction of Australian courts. The concept of ‘carrying on business in Australia’, however, is uncertain. The CCA is silent as to what it means to be carrying on business in Australia. Section 5 has given rise to protracted satellite litigation of abstract and technical threshold issues.[20] Australian courts have imposed a narrow test for ‘carrying on business’, [21] the limits of which are unclear. It is uncertain whether the CCA applies, for example, where there was no local subsidiary through which a foreign corporation implemented the cartel. It remains to be seen whether the act of selling a product in Australia that is affected by a cartel arrangement would be sufficient to establish jurisdiction under the CCA.[22]

The Harper Review considered that the application of the law to a foreign corporation should not depend on whether the corporation otherwise carries on business in Australia and, if the conduct of a foreign corporation harms competition in an Australian market, it should be subject to Australian law. [23] Recommendation 26 of the Harper Review is that s5 be amended to remove the requirement that the contravening firm has a connection with Australia in the nature of residence, incorporation or business presence and, instead, the competition law should apply to overseas conduct insofar as it relates to trade or commerce within Australia or between Australia and places outside Australia.[24]

The second impediment recognised by the Harper Review in relation to overseas conduct arises out of s5 of the CCA. It requires litigants to apply for ministerial consent before relying on extra-territorial conduct in their claim. This requirement consumes further time, imposes additional costs, and creates uncertainty. Ministerial consent, whether granted or refused, has led to expensive ancillary proceedings which require expert evidence on foreign law, as well as evidence relating to international comity and similar concerns.[25]

The requirement for ministerial consent was introduced in 1986 as a result of concerns about the extra-territorial reach of the relevant competition laws and in circumstances where, at that time, many countries did not have competition laws. This could potentially give rise to diplomatic and comity issues if proceedings were brought in Australia in respect of overseas conduct if that conduct was permitted or authorised in the jurisdiction in which it occurred. The Harper Review acknowledged that many countries have since enacted competition laws; greater uniformity has emerged in regard to extra-territorial reach of competition laws in comparable jurisdictions, to the effect that the laws apply if overseas conduct has a direct domestic effect.[26] It also noted that there was no corresponding requirement to seek consent in the US, Canada, UK, EU or New Zealand.[27]

The Harper Review recommended removal of the requirement of the parties to private competition actions to seek ministerial consent before relying on extra-territorial conduct.[28]

These recommendations, if implemented, would be a welcome development that would remove unnecessary technicalities, decrease the likelihood of satellite litigation and thereby assist in ensuring the protection of the economic welfare of persons in Australia in the context of increasingly transnational commerce.


Private enforcement of competition laws through class actions is rare and it is not increasing. If anything, given that no cases have commenced since 2007, private enforcement through class actions has significantly decreased.

Class actions are an effective vehicle for obtaining redress for victims of unlawful conduct and deterring unlawful conduct. The very low level of private enforcement through class actions to date suggests reform is required to facilitate the victims of cartels in obtaining compensation for the harm that they have suffered and thereby to deter cartel conduct and to stretch the effect of the regulatory dollar. In assessing the risk of engaging in cartel conduct, another factor that favours unlawful cartel conduct in Australia is that there is a good chance that the wrongdoer will be able to keep a significant portion of the profits. The recommendations of the Harper Review in relation to private enforcement are sensible and ought to be enacted. These recommendations will dispense with some of the difficulties that have arisen in cartel class actions to date. Many real challenges remain, and it is therefore unlikely that the recommendations of the Harper Review alone will result in more private enforcement class actions.

Rebecca Gilsenan is a Principal in the Class Actions Department at Maurice Blackburn. Rebecca was involved in the CFP and Air Cargo class actions referred to in this article. PHONE (02) 92611488 EMAIL

[1] Caron Beaton-Wells, and Kathryb Tomasic, ‘Private Enforcement of Competition Law: Time for an Australian Debate’ [2012] UNSWLawJl 27; (2012) 35(3) 648.

[2] V Morabito, ‘An Empirical Study of Australia’s Class Action Regimes, Third Report, Class Action Facts And Figures – Five Years Later (2014). Electronic copy available at:

[3] Council for the City of the Gold Coast v Pioneer Concrete (Qld) Pty Ltd QUD190/1996 (Pioneer Concrete).

[4] Darwalla Milling Co Pty Ltd v Hoffman-La Roche Ltd (No. 2) [2006] FCA 915 (Orders and judgement dated 31 August, 27 October 2006) (Vitamins).

[5] Jarra Creek Central Packing Shed Pty Ltd v Amcor Ltd and Anor, [2011] FCA 671 (Orders dated 2 May 2011) (CFP).

[6] De Brett Seafood Pty Ltd & Anor v Qantas Airways Limited & Ors (Orders dated 6 June 2014). (Air Cargo)

[7] Wright Rubber Pty Ltd v Bayer AG (No. 3) [2011] FCA 1172 (Orders dated 2 September 2011) (Rubber Chemicals).

[8] V Morabito, see note 2 above.

[9] I Harper, P Anderson, S McCluskey, M O’Bryan, Competition Policy Review Final Report, March 2015, Part 4 – Competition Laws at p416.

[10] Australian Competition and Consumer Commission v Apollo Optical (Aust) Pty Ltd (2001) ATPR 41-843; [2001] FCA 1456; BC200106300 per Carr J at [22] and [24] to [26]; see also Australian Competition and Consumer Commission v Monza Imports Pty Ltd (2001) ATPR 41-843; [2001] FCA 1455; BC200106299 per Carr J stated at [25].

[11] Ibid.

[12] Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd (No. 3) (2005) 215 ALR 301; (2005) ATPR 42-052; [2005] FCA 265; BC200501239 Merkel J at [118].

[13] Competition Policy Review Final Report, see note 9 above, pp408 and 416. Recommendation 41 at p417.

[14] Address given by M Bezzi, Executive General Manager, Competition and Enforcement, ACCC at the Competition Law Conference, Sydney 30 May 2015.

[15] See Cadbury Schweppes Pty Ltd v Amcor Limited [2008] FCA 88; (2008) 246 ALR 137, 146 [31]; ACCC v Prysmian Cavi E Sistemi Energia SRL [2011] FCA 938.

[16] Cadbury Schweppes Pty Ltd v Amcor Limited [2008] FCA 88; (2008) 246 ALR 137, 146 [31].

[17] Dellavedova, Guttuso and Stevenson, ‘Private Enforcement in Australia’, ABA Antitrust Section, Civil Redress Committee, International Civil Redress Bulletin Issue 3, December 2014.

[18] The CFP cartel also extended to New Zealand, although there were no allegations in the Australian class action about overseas conduct. See Commerce Commission v Visy Board (NZ) Limited & Ors [2013] NZHC 2097.

[19] Competition Policy Review Final Report, above note 9 – Competition Laws at p412.

[20] See Bray v F Hoffman-La Roche Ltd [2002] FCA 243; (2002) 118 FCR 1 at 23 (Bray); Auskay International Manufacturing and Trade Pty Ltd v Qantas Airways Ltd [2008] FCA 1458; (2008) 251 ALR 166 at 180-1.

[21] Dellavedova, Guttuso and Stevenson, see note 17 above; see also ACCC v April International Marketing Services Australia Pty Ltd [2010] FCA 704, which addresses s5 only as an ancillary matter, but at least suggests some willingness to apply less stringent criteria than those articulated in Bray.

[22]Dellavedova, Guttuso and Stevenson, see note 17 above.

[23] Competition Policy Review Final Report, see note 9 above – Competition Laws at pp412-13.

[24] Ibid, Competition Laws at p418.

[25] See, for example, Cathay Pacific Airways Limited v Assistant Treasurer and Minister for Competition Policy and Consumer Affairs [2010] FCA 510.

[26] Competition Policy Review Final Report, see note 9 above – Competition Laws at p414.

[27] Ibid at p415.

[28] Ibid, Recommendation 26.

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