K Line Fined $23.5m for Criminal Cartel Conduct in Australia

Japanese shipping major Kawasaki Kisen Kaisha Ltd (K Line) has been convicted of criminal cartel conduct and ordered by the Federal Court of Australia to pay a fine of AUD 34.5m ($23.5m).

The court found 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, Australian Competition & Consumer Commission (ACCC) said.

K Line’s fine of AUD 34.5m is said to be the largest ever criminal fine imposed under the Competition and Consumer Act in the country.

In April 2018, K Line pleaded guilty following an extensive criminal investigation by the 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 US, Asia and various European countries. K Line and other shipping lines transported these vehicles on behalf of 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.”

“This decision is a serious warning to businesses and will deter others seeking to join or start a cartel. Businesses should know that engaging in cartel conduct will result in ACCC scrutiny and result in potentially very serious consequences,” Sims further said.

K Line’s conduct was punishable by a maximum penalty of AUD 100m, based on 10% of K Line’s agreed annual turnover relating to Australian business activities in the 12 months prior to the commencement of the offence.

The court also allowed for a discount of 28% for K Line’s early guilty plea, and for their level of assistance and co-operation. The court considered these elements as signs of contrition. Specifically, without K Line’s early guilty plea and co-operation, the company would have been fined AUD 48m.

In his judgment summary, Justice Wigney stated that the “penalty imposed on K Line should send a powerful message” and that “anti-competitive conduct will not be tolerated and will be dealt with harshly when it comes before this court”.

K Line was sentenced for one “rolled-up” criminal charge of giving effect to cartel provisions.

The Australian conviction follows that of another cartel participant, K Line’s compatriot shipping company Nippon Yusen Kabushiki Kaisha (NYK), in August 2017. NYK was convicted of criminal cartel conduct and ordered to pay a fine of AUD 25m.

In August 2018, K Line was also fined ZAR 99m ($6.8m) for its involvement in a price-fixing cartel in South Africa.