Federal Court Orders Singapore Based Cartel to Pay Penalties Totalling $4.2 Million for Price Fixing
Canberra, Australia (News4us.com) March 01, 2011
The Federal Court has ordered Singapore based Asia Pulp & Paper Co Ltd (APP Singapore) and a related Indonesian company, PT Indah Kiat Pulp and Paper Tbk (Indah Kiat) to pay penalties totalling $4.2 million for fixing the price of photocopy paper and uncoated woodfree folio paper supplied to Australian customers.
After the two companies admitted certain facts about their involvement in the price fixing arrangements, the court ordered APP Singapore to pay a penalty of $3.4 million and Indah Kiat was ordered to pay $800,000.
Australian Competition and Consumer Commission chairman Graeme Samuel said this outcome sends a strong message that the law applies to foreign cartels which cause harm to Australian consumers.
In joint submissions to the court by the ACCC and the two companies, APP Singapore and Indah Kiat both admitted that they had taken part in 16 meetings with competitors at what was referred to as the AAA Club (pronounced Triple A), between December 2000 and January 2004. At the meetings, they made arrangements or understandings with competitors about the average price of paper sold, and it was alleged that the companies gave effect to these arrangements in their Australian pricing. None of the meetings occurred in Australia.
These orders mean that the Federal Court has now imposed total penalties of $8.2 million on corporations involved in the AAA Club. In January 2010, the Federal Court ordered APRIL Fine Paper Trading Pte Ltd, a Singapore based company, and APRIL International Marketing Services Australia Pty Ltd to pay $4 million in penalties for their involvement in the AAA Club and $250,000 towards the ACCC’s costs.
“This matter illustrates how the ACCC will pursue cartel arrangements made overseas by foreign corporations that affect Australian prices and consumers,” Mr Samuel said.
Justice Bennett noted in her judgment the following agreed facts, amongst others, about the conduct:
- the “AAA Club meetings involved systematic, sophisticated and long-running cartel arrangements between the participants”; the conduct was “deliberate and coordinated cartel conduct which occurred over a period of approximately 3 years”
- “the price fixing agreements made related to supply in individual countries, expressly including Australia”
- the two companies “implemented in Australia the prices that were agreed at the AAA Club meetings” through a related Australian company
- the “conduct at AAA Club meetings involved the making of price fixing arrangements which arose in circumstances where the cartel participants were seeking to achieve stability in pricing by avoiding competition amongst themselves,” and
- APP Singapore and Indah Kiat are part of a multinational group of companies, which included two other mills that also supplied paper to Australia, Tjiwi Kimia and Pindo Deli.
Justice Bennett also noted that the penalties were discounted, due to the cooperation of the two companies.
As well as declaring that the companies breached the price fixing provisions of the Trade Practices Act 1974 (now renamed the Competition and Consumer Act 2010) and the Competition Codes, the court also ordered:
- injunctions to restrain both companies from engaging in similar conduct, and
- that the two companies contribute $300,000 towards the ACCC’s costs in the proceedings.
In December 2006 the ACCC commenced proceedings against a number of foreign and local corporations and individuals. As referred to above, in early 2010 some of those parties agreed to admit their conduct, and penalties were imposed (see news release 12/10, issued on 3 February 2010). Proceedings against the other respondents have been discontinued.
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