Name: Wallenius Wilhelmsen Ocean AS (WWO)
Date of Judgment: 4 February 2021
Practice Group: Commercial Financial Corruption
Court: Federal Court of Australia
Partner Agency: Australian Competition and Consumer Commission (ACCC)
Summary of charges:
On 4 February 2021, Justice Wigney of the Federal Court of Australia convicted Wallenius Wilhelmsen Ocean AS with criminal cartel conduct.
The charge relates to cartel conduct regarding the international shipping of vehicles to Australia contrary to s 44ZZRG(1) of the Competition and Consumer Act 2010 (Cth) (CCA).
Between June 2011 and July 2012, WWO intentionally gave effect to a cartel provision in an agreement it had reached with competitors for the supply of ocean shipping services.
At least two other parties were involved in WWO’s conduct, Nippon Yusen Kabushiki Kaisha (NYK) and Mitsui OSK Lines Ltd (MOL). This involved what was said to be a ‘rule of respect’ or ‘guiding principle’ meaning parties in the agreement would seek to allocate certain customers between themselves on certain international shipping routes, including routes to Australia. They would not attempt to win each other’s existing business ensuring their existing market shares were “respected”.
WWO ultimately pleaded guilty to the charges.
This outcome marks the culmination of an extensive and complex criminal cartel investigation by the ACCC. The result of the investigation led to the successful prosecution and conviction of three international shipping companies and resulting in fines totaling $83.5m. In August 2017, NYK was fined $25 million and in August 2019 Kawasaki Kisen Kaisha (K-Line) was fined $34.5 million. The penalty imposed on K-Line remains the largest criminal fine ordered under the CCA.
The three shipping companies were the subject of ACCC’s first criminal cartel investigations after the introduction in July 2009 of provisions into the CCA which criminalised cartel conduct.
The ACCC’s investigation into this cartel, which was assisted by the US Department of Justice, Federal Bureau of Investigation, the Japan Fair Trade Commission and the European Commission, shows the agency’s commitment to tackling criminal cartels and the value of strong networks between competition agencies worldwide.
On 18 June 2020, WWO pleaded guilty to a single rolled-up charge of intentionally giving effect to cartel provisions contrary to s 44ZZRG of the CCA.
WWO also admitted guilt in relation to two further offences of giving effect to cartel provisions in November 2009 which were considered in sentencing.
On 4 February 2021, Justice Wigney convicted WWO of the offence and fined the company $24 million.
Whilst WWO indicated at an early stage of negotiations with the ACCC that it intended to plead guilty to the offence, the plea was only entered following significant and extensive negotiations between the CDPP and WWO’s legal representatives over a period of almost nine months.
During sentencing, Justice Wigney remarked on the difficulty of detecting, investigating and prosecuting cartel conduct of corporate offenders who can deploy considerable resources and position themselves to minimise the risk of detection.
Justice Wigney observed that general deterrence was a weighty consideration in sentencing for offences which are difficult to detect and investigate. His Honour noted that the importance of general deterrence had also been accepted in imposing penalties for anti-competitive conduct in the civil penalty context.