K-Line’s criminal cartel conduct brings hefty Australian fine

Japanese shipping company Kawasaki Kisen Kaisha Ltd (K-Line) has been convicted of criminal cartel conduct and ordered by Australia’s Federal Court to pay a fine of A$34.5 million (about US$23.4 million).

The Federal Court found that K-Line engaged in a cartel with other shipping companies in order to fix prices on the transportation of cars, trucks, and buses to Australia between 2009 and 2012.

K-Line’s fine of A$34.5 million is the largest ever criminal fine imposed under Australia’s Competition and Consumer Act.

K-Line pleaded guilty on April 5, 2018, following an extensive criminal investigation by the Australian Competition and Consumer Commission (ACCC) and the laying of charges by the Commonwealth Director of Public Prosecutions (CDPP).

The cartel operated from at least February 1997, and impacted the transportation prices of cars, trucks, and buses to Australia from the U.S., Asia and various European countries. K-Line, and other shipping lines transported these vehicles on behalf of major car manufacturers such as Nissan, Suzuki, Honda, Toyota and Isuzu and others.

“We welcome the Court’s decision and the significant penalty imposed on K-Line,” ACCC Chair Rod Sims said. “Cartel conduct, such as that engaged in by K-line, not only cheats consumers and other businesses through inflated prices and costs, but also restricts healthy economic growth and discourages innovation.”

K-Line’s conduct was punishable by a maximum penalty of A$100 million, based on 10 per cent of K-Line’s agreed annual turnover relating to Australian business activities in the 12 months prior to the commencement of the offense.

The Court also allowed for a discount of 28% for K-Line’s early guilty plea, and for its level of assistance and cooperation. The Court considered these elements as signs of contrition.

The conviction follows that of another cartel participant Nippon Yusen Kabushiki Kaisha (NYK), in August 2017. NYK was convicted of criminal cartel conduct and ordered to pay a fine of A$25 million.

The cartel has been investigated and prosecuted in a number of other jurisdictions, including the United States, where key K-Line executives have been imprisoned or indicted.

ac