Monday, August 5, 2019

Another Shameful Day for Japanese RoRo Shipping Interests as Cartel Fined for Price Fixing  

Record Penalty Imposed Even After Mitigation for Guilty Plea

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Shipping News Feature AUSTRALIA – The Federal Court of Australia has convicted Japanese shipping line Kawasaki Kisen Kaisha (K-Line) of criminal cartel conduct and ordered it to pay a fine of A$34.5 million, the largest ever criminal fine imposed under the country's Competition and Consumer Act. The Federal Court found K-Line engaged in a cartel with other shipping companies in order to fix prices on the RoRo shipments of motor vehicles between 2009 and 2012.

K-Line pleaded guilty on April 5, 2018, following an extensive criminal investigation by the Australian Competition and Consumer Commission (ACCC) and the laying of charges by the Commonwealth Director of Public Prosecutions (CDPP).

The cartel operated from at least February 1997, and impacted the transportation prices of cars, trucks, and buses to Australia from the US, Asia and various European countries. K-Line, and other shipping lines transported these vehicles on behalf of major car manufacturers such as Nissan, Suzuki, Honda, Toyota and Isuzu and others. ACCC Chair Rod Sims commented:

“We welcome the Court’s decision and the significant penalty imposed on K-Line. Cartel conduct, such as that engaged in by K-line, not only cheats consumers and other businesses through inflated prices and costs, but also restricts healthy economic growth and discourages innovation.

“This decision is a serious warning to businesses and will deter others seeking to join or start a cartel. Businesses should know that engaging in cartel conduct will result in ACCC scrutiny and result in potentially very serious consequences.”

K-Line’s conduct was punishable by a maximum penalty of A$100 million, based on 10% of K-Line’s agreed annual turnover relating to Australian business activities in the 12 months prior to the commencement of the offence.

The Court allowed for a discount of 28% for K-Line’s early guilty plea, and for the company’s level of assistance and cooperation. The Court considered these elements as signs of contrition. The Court held that without K-Line’s early guilty plea and cooperation, K-Line would have been fined A$48 million. In his judgement summary, Justice Wigney stated

”The penalty imposed on K-Line should send a powerful message. Anti-competitive conduct will not be tolerated and will be dealt with harshly when it comes before this Court The offence committed by K-Line was a very serious offence in all the circumstances, and the scope of the conduct was substantial and extensive. It occurred in a market for services that were and are of considerable economic importance to Australia.”

K-Line was sentenced for one ‘rolled-up’ criminal charge of giving effect to cartel provisions. A ‘rolled-up’ charge is one in which more than one offence forms part of the charge. The conviction follows that of another participant in the cartel, Nippon Yusen Kabushiki Kaisha (NYK), in August 2017. NYK was convicted of criminal cartel conduct and ordered to pay a fine of A$25 million. The companies make up two thirds of Ocean Network Express (ONE) the container shipping company formed in 2018.

The matter of this particular cartel has been investigated and prosecuted in a number of other jurisdictions, including the United States, where key K-Line executives have been imprisoned or indicted.

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