The Federal Court has convicted Japanese shipping company Nippon Yusen Kabushiki Kaisha (NYK) of criminal cartel conduct and ordered it to pay a fine of $25 million, the second-highest fine imposed in ACCC history.
The judgment also marks the first successful prosecution under the criminal cartel provisions of the Competition and Consumer Act 2010 (CCA).
Following an extensive investigation by the ACCC, the Commonwealth Director of Public Prosecutions (CDPP) charged NYK with giving effect to cartel provisions in an arrangement or understanding with other shipping lines relating to the transportation of motor vehicles to Australia between 2009 and 2012.
The cartel operated from at least February 1997 and affected vehicles transported to Australia by NYK and other shipping lines from locations in Asia, the US and Europe on behalf of major car manufacturers including Nissan, Suzuki, Honda, Toyota and Mazda.
ACCC chairman Rod Sims welcomed the Federal Court’s decision.
“The Australian community relies heavily on imported vehicles, so a longstanding cartel in relation to the transportation of those vehicles to Australia was of significant concern,” ACCC chairman Rod Sims said.
“The NYK fine is also the second largest ever imposed under the Competition and Consumer Act, and incorporated a significant discount for NYK’s plea and cooperation.”
Justice Wigney said the fine “incorporates a global discount of 50% for NYK’s early plea of guilty and past and future assistance and cooperation, together with the contrition inherent in the early plea and cooperation – meaning that but for the early plea and past and future cooperation, the fine would have been $50 million”.
In this case, the maximum penalty was calculated on the basis of 10 per cent of NYK’s annual turnover in connection with Australia, in the 12 months prior to the commencement of the offence. On that basis, NYK’s conduct attracted a maximum penalty of $100 million.
“The sentence imposed on NYK by the Federal Court sends a strong warning to the industry and the business community at large. The CDPP and ACCC can and will criminally prosecute cartel conduct. It also highlights that parties who engage early and cooperate with the authorities may be shown leniency,” Mr Sims said.
Justice Wigney said in his judgment the “cartel conduct of the sort engaged in by NYK warrants denunciation and condign punishment” because “it is ultimately detrimental to, or at least likely to be detrimental to, Australian businesses and consumers. The penalty imposed on NYK should send a powerful message to multinational corporations that conduct business in Australia that anti-competitive conduct will not be tolerated and will be dealt with harshly”.
NYK entered a guilty plea on 18 July 2016 in the Federal Court. NYK has cooperated throughout the ACCC’s investigation.
NYK 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. Rolling-up is permissible on a plea of guilty in Commonwealth matters.
On 2 November 2016, the CDPP laid charges against another alleged participant in the cartel, Kawasaki Kisen Kaisha (K-Line), also a Japanese shipping company. The ACCC’s investigation in relation to other alleged cartel participants is continuing.
NYK is headquartered in Tokyo and has a controlling interest in a global group of companies with offices in Europe, Africa, East Asia, South Asia, China, Oceania and the North and South Americas with over 33,000 employees. It also operates an Australian subsidiary, NYK Line (Australia) Pty Ltd.