The Federal Court has sentenced a family-owned Australian pharmaceutical company and its former export manager for engaging in criminal cartel conduct, following a criminal prosecution by the Commonwealth Director of Public Prosecutions, that arose from an investigation by the ACCC.
Alkaloids of Australia, which produces scopolamine N-butylbromide (SNBB), the active pharmaceutical ingredient used in common anti-spasmodic medications, was convicted and fined $1,987,500.
Its former export manager, Christopher Kenneth Joyce, was also convicted and was sentenced to two years and eight months' imprisonment to be served as an intensive corrections order, including 400 hours of community service.
Mr Joyce was also disqualified from managing corporations for five years and fined $50,000.
In late-2021, Mr Joyce and Alkaloids of Australia pleaded guilty to three criminal charges, and admitted to a further seven offences, in respect of making, attempting to make, and giving effect to several cartel arrangements with overseas pharmaceutical ingredient suppliers that involved price fixing, bid rigging, output restriction and market allocation.
The Court took into account Mr Joyce and Alkaloids of Australia's early guilty pleas in sentencing.
"We welcome these outcomes, which should serve as a strong reminder that criminal cartel conduct is a serious offence attracting serious consequences, including significant fines, banning orders, and imprisonment for individuals," ACCC Commissioner Liza Carver said.
"The sentence imposed on Mr Joyce is the longest sentence of imprisonment imposed on an individual under the criminal cartel laws so far."
The charges relate to five years of cartel conduct in the period from July 2009, when criminal cartel laws came into force in Australia.
"This was a particularly concerning and serious case of cartel conduct by Alkaloids of Australia over a sustained period which included price fixing that had worldwide impact," Ms Carver said.
The Court heard Mr Joyce (on behalf of Alkaloids of Australia) regularly met at industry conventions and communicated via email and phone with competing manufacturers of SNBB around the world and agreed to fix the minimum price for SNBB, to allocate customers between each other and to arrange what price would be quoted to customers to ensure a particular manufacturer won the sale.
In addition, Mr Joyce (on behalf of Alkaloids of Australia) attempted to induce competing SNBB manufacturers to limit the production of SNBB and/or its precursor plant, Duboisia, which is grown in Australia.
"Alkaloids of Australia produces and supplies an active ingredient derived from a plant predominantly grown and processed in the Kingaroy region in Queensland and exported for use in medications globally, so the cartel conduct potentially increased prices for consumers and businesses around the world," Ms Carver said.
"Investigating serious cartels remains an important priority for us, because of the harm such anti-competitive conduct has on consumers, other businesses, and the economy as a whole."
Background
Alkaloids of Australia is a pharmaceutical ingredient company that produces and supplies SNBB (scopolamine N-butylbromide, also known as hyoscine butylbromide), which is an active pharmaceutical ingredient in antispasmodic medications taken to relieve stomach pain and bowel cramps. The company is based in Queensland.
SNBB is manufactured from the Duboisia plant, which is native to Australia. Duboisia plants are grown commercially in and around Kingaroy in Queensland for the pharmaceutical industry. SNBB is produced in Australia and the medications are then imported into Australia as a final product.
On 1 December 2020, Alkaloids of Australia and its former export manager, Christopher Joyce were charged with criminal cartel offences under the Competition and Consumer Act, formerly called the Trade Practices Act, following an ACCC investigation.
On 26 October 2021 and 16 November 2021 respectively, Christopher Joyce and Alkaloids of Australia each pleaded guilty to three charges, and admitted guilt in respect of seven further offences, relating to conduct in respect of cartel arrangements between Alkaloids of Australia and other SNBB suppliers.
Note
A cartel exists when businesses agree to act together instead of competing with each other. Conduct can include price fixing, sharing markets, rigging bids and controlling the output or limiting the amount of goods and services. More information on cartel conduct can be found on the ACCC's website at Cartels.
The ACCC investigates cartel conduct, manages the immunity process and, in respect of civil cartel contraventions, takes proceedings in the Federal Court.
The CDPP is responsible for prosecuting criminal cartel offences in accordance with the Prosecution Policy of the Commonwealth. The ACCC refers serious cartel conduct to the CDPP for consideration of prosecution in accordance with the Memorandum of Understanding between the CDPP and the ACCC regarding Serious Cartel Conduct.
For corporations, the maximum fine for each criminal cartel offence before 9 November 2022 is the greater of:
- $10 million,
- three times the total benefits that have been obtained and are reasonably attributable to the commission of the offence, or
- if the total value of the benefits cannot be determined,10 per cent of the corporation's annual turnover connected with Australia.
An individual convicted of a criminal cartel offence before 9 November 2022 may be sentenced to up to 10 years' imprisonment or fined up to $444,000, or both.
The maximum fines and civil penalties for cartel conduct by corporations were substantially increased with effect from 9 November 2022, by legislation passed by Parliament in October.
Anyone who thinks they may be involved in cartel conduct is urged to call the ACCC Cartel Immunity Hotline on (02) 9230 3894. More information about the immunity process is available on the ACCC website at Cartels.
You can report suspected cartel conduct by using the anonymous cartel portal.
Use this form to make a general enquiry.
