A business cartel is an illegal activity where two or more companies decide to act together in their business ventures rather than compete against the other, effectively monopolising the market – or at least, greatly minimising healthy competition with other businesses.
The purpose of cartels is to control the market of whatever business the companies are involved in; this can mean that cartels can more easily drive up prices, restrict others’ access to the goods and services involved in their business; and lessen the chances of smaller and honest businesses running smoothly, putting them at severe financial risk and detriment.
Cartels and Business Owners
Worryingly, business cartels are becoming more common and harder to catch. As a business owner, particularly if you are the owner of a smaller business, it is vital you know your legal rights in regards to the operation of cartels. This is particularly important when it comes to the legal relationship between you and your supplier/s, as should a cartel target one of your suppliers, this can adversely affect your access to these goods and services and/or drastically increase the prices of these goods. This can have dire consequences for your business as your budget may be pushed to its limit attempting to accommodate for the change in costs.
What kinds of activities should your business look out for?
As a business owner, you should always be aware of the following and be sure to report any suspicious activity to the ACCC and obtain legal advice:
- Be aware of the different kinds of supply and other arrangements that competitors in your industry have, particularly with other companies and suppliers
- Has your supplier recently had a significant price rise or other sudden change?
- Liaise with different suppliers to obtain the best possible price, and try and utilise a wide range of suppliers, rather than relying on a single one, which would effectively be ‘putting your eggs in one basket’
- Ask your lawyer to include anti-collusion clauses in any documentation and contracts you need to have with your suppliers and other related parties. This may involve requiring these parties to declare they have not conspired or colluded with any competitors or other parties in the supply of good and services
Business Cartels and the Law
Business cartels are illegal under civil and criminal law; thus, individuals and corporations caught acting in a cartel are liable for civil and criminal penalties, including fines ranging between $360,000 and $10 000,000, jail time of up to 12 months; injunctions; orders disqualifying parties from managing corporations; and community service orders. It is evident that the severe and far-reaching nature of penalties available to the Courts means that the operation of business cartels is something the law takes very seriously. Accordingly, should your business be affected by business cartels, it is imperative you seek legal advice to ensure your business is protected.
If you want to protect your business from the threat of collusion, or for any other business related matter such as contract advice, contact our solicitors on 02 8917 8700 or fill out the enquiry box and we will get back to you ASAP.