The Rudd Government’s promise to criminalise cartel conduct is causing plenty of excitement in the legal profession, with the Melbourne Law School last night putting on its biggest ever paid seminar in front of 150 people.

The four speakers were former ACCC chairman Bob Baxt, veteran Federal Court judge Peter Heerey, Sydney University academic-turned-lawyer Brent Fisse and Melbourne University’s Dr Caron Beaton-Wells.

The strongest message in response to the government’s recently released exposure draft was to forget about having a “dishonesty” test.

The US doesn’t have it and Justice Heerey reckons their system works just fine. Once you introduce dishonesty then you’ll have all sorts of arguments. Loss-making competitors could argue they were just trying to save jobs, not being dishonest.

The answer is to make collusion, price-fixing and cartel behaviour illegal and in the more serious case, subject to criminal sanction.

However, there are still plenty of problems with the exposure draft. To start with, it hasn’t even produced a definition of “serious cartel conduct”, drawing a line between the existing civil system and the new frontier.

Whilst the maximum five year jail term for criminal conduct seems appropriate, the maximum fine for corporates of $10 million is well below the $US100 million in the US and the proposed maximum fine of just $220,000 for individuals is a joke, given that the maximum civil penalty is currently $500,000.

Some speakers were nervous about introducing juries and state courts for the first time. Why not just keep the whole game before the Federal Court? Then again, the ACCC and competition law is supposedly a federal-state collaboration although the rather closed-door process so far does not suggest the states have had any involvement at all.

Professor Baxt was particularly passionate, lashing the Howard Government for doing nothing about cartels and urging Labor to take its time to get it right because “failure can be a disaster”.

He also took a broader swipe at governments for not properly funding regulatory authorities and the “extraordinary and unacceptable” Australian tendency of changing the law whenever something goes wrong. We’re certainly doing that in response to Dick Pratt’s dodgy cartel.

The Rudd Government appointed Lindsay Tanner the minister for deregulation but these new laws only demonstrate once again the complexity that flows from building new rules on an existing hotch potch.

The exposure draft is full of interminable cross-references to other statutes and paragraph references such as “44zzrd(2)(a)(iv)”.

Justice Heerey suggested we just start afresh with the American system and keep it nice and simple.

Given that the Trade Practices Act is our most litigated law in the land and one of the great Whitlam legacies, it might not be quite that easy.

Peter Fray

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