This research concerns a subject of real practical significance to Australia. The introduction of criminal sanctions for serious cartel conduct is portrayed by regulators and legislators as necessary to reduce the most serious forms of anti-competitive behaviour in Australian industry, and therefore a crucial next step in advancing the substantial economic and social benefits that competition policy brings. However, to date there has been limited critical debate about the justifications for criminalisation. Nor has there been in-depth empirical investigation as to whether criminalisation is in fact apt to achieve the purposes claimed, or how it should be implemented and enforced. This is despite the obvious complexities in designing and administering a new criminal regime for conduct that traditionally has not been seen as criminal, and in some quarters may still be seen as normal business conduct.
The scope of this project will fill these gaps with its in depth, multi-perspectival investigation of serious cartel conduct criminalisation at all levels of the policy-making, practical implementation and enforcement, and compliance process in Australia, and comparatively. The research looks backwards (understanding how serious cartel conduct criminalisation came to be policy and how businesses have responded to civil enforcement in the past), forwards (to predict future business compliance) and contemporaneously as the implementation and enforcement of a new criminal regime unfolds.
Now is the critical time to do this research just as Australia is criminalising serious cartel conduct. Doing this research now means that the researchers can do contemporaneous interviews with relevant actors, and take advantage of the rare opportunity to conduct a 'natural experiment' into the impact of criminalisation on perceptions and behaviour. The research will allow us to establish the baseline of perceptions and behaviour at the point of criminalisation before any criminal cases are brought.
Doing this research now will also enable the researchers to make a substantive contribution to legal and practical issues arising in the early years, critical to the successful operation of the new criminal regime. Such issues will arise in connection with interpretation of the new law by judges and parties before the courts; use of the ACCC's existing powers in the criminal context as well as its new powers and the need for it to formulate relevant guidelines on such matters; the operation of the immunity policy given the differences in approach to immunity by the ACCC and DPP; difficulties raised by multi-jurisdictional cases including extradition; the development of sentencing guidelines; and the revision of the ACCC's enforcement policy and practices to reflect the addition of criminal sanctions to its armoury. The research conducted to date on the draft legislation has shown that these are difficult and, in many respects, controversial issues that will have significant practical implications for the business sector and its advisors, as well as the members of the ACCC, DPP and courts involved in administering the new regime.
The research carried out for the Cartel Project will also contribute to broader theoretical debates in Australia and internationally concerning the nature and impetus for regulatory reform and effective approaches to business regulation. This Project will provide insight into the political and social conditions in which regulatory reform criminalising a certain type of business conduct is motivated and justified. This analysis will inquire below the surface of the various utilitarian justifications for cartel criminalisation (to reduce economic harms of inflated prices and distortion of competition) to understand what serious cartel conduct criminalisation policy-making tells us about the moral and ideological values animating regulatory capitalism. In addition, the criminalisation of serious cartel conduct is just one example of a broader and increasingly significant debate in regulation and economics disciplines over how individuals and business organisations respond to law and regulatory enforcement. The proposed research will use cartel criminalisation as a contemporary case-study and natural experiment to help answer fundamental questions about what motivates and explains compliance with the law, as well as more policy-oriented questions about how best to punish and prevent corporate non-compliance.
The research undertaken for the Cartel Project is innovative in the unique combination of legal, sociological and economic expertise and documentary, qualitative and quantitative research methodologies that will be brought to bear on all aspects of cartel criminalisation. Economists, often using non-empirical economic modelling, have previously dominated research on compliance with competition law. It is rare to have a team that includes an economist (Round), criminologist-sociologist (Haines), regulation scholar (Parker) and lawyer (Beaton-Wells) all working together in competition law, especially in the Australian context. Australia (including through the work of the researchers) is globally recognised as a centre for the very best scholarship attempting to explain compliance with the law and the impact of regulatory enforcement using interdisciplinary combinations and robust empirical testing. This Project will use for the first time this interdisciplinary empirical approach to understand the impetus for, and formally test the impact of, criminalisation in economic regulation.