Managing complexity in cartel conduct prosecutions
The Country Care Group Pty Ltd v Commonwealth Director of Public Prosecutions [2020] FCAFC 30
Introduction
This proceeding is the first contested criminal prosecution for cartel conduct under the Competition and Consumer Act 2020 (Cth). The Commonwealth Director of Public Prosecutions filed an indictment charging Country Care Pty Ltd, its managing director and a former employee.
The Full Court of the Federal Court recently handed down its decision in The Country Care Group Pty Ltd v Commonwealth Director of Public Prosecutions [2020] FCAFC 30, addressing the complexity that arises in prosecuting these offences. The decision provides guidance about the elements of the offences, the alternative bases of criminal liability and whether the trial would be unfair or oppressive to the accused because of its complexity. This case note deals with the last of these issues.
The factual allegations
What follows is a summary of the prosecution allegations. Country Care supplies products to the Department of Veterans’ Affairs. To satisfy its supply contracts, Country Care relies on a network of other suppliers. Those suppliers are members of what is described as the ‘Country Care Group’. The Group members supply products to Veterans’ Affairs at prices agreed between Country Care and Veterans’ Affairs. Aside from the Country Care Group, the member businesses also sell to the public.
Country Care’s managing director was confronted with a problem: some of the Group members were publicly advertising their products for sale at prices lower than what Country Care was charging Veterans’ Affairs. He was concerned that if Veterans’ Affairs found out, it would want to re-negotiate prices.
The prosecution allege that the managing director (and, through him, the company) attempted to induce Group members to enter into an arrangement or understanding containing a cartel provision. This was by making statements to Group members in 2014 and 2015 telling them not to publicly advertise products sold to Veterans’ Affairs at a price lower than what had been contracted. In 2016, Country Care asked Group members to sign a contract containing a clause prohibiting them from advertising products sold to Veterans’ Affairs at a lower price than had been agreed.
Of course, these allegations remain to be proven at trial.
Procedure to date
The proceeding commenced in February 2018. As with most criminal prosecutions in Victoria, it commenced in the Magistrates’ Court. In that Court, serious indictable offences undergo case management in a ‘committal proceeding’. In March 2019, a magistrate committed (i.e. was satisfied there was sufficient evidence for[1]) each accused to stand trial for the charges in the Federal Court.
The trial was originally set down for October 2019. That trial date has since been adjourned three times, most recently due to the suspension of jury trials because of Covid-19.[2]
Complexity
This case represents a messy collision of competition and criminal law. Practitioners with backgrounds in one or the other are forced to come to terms with unfamiliar areas of law. This also makes the task of the jury no simpler.
This issue came to the fore in the most recent interlocutory dispute which was the subject of the Full Court’s decision. Country Care argued that the eight charges on indictment should be severed into two trials. To hear all at the same time would be unfair and oppressive. This was because the case would be highly complex, so much so that the jury would not be able to comprehend it.
It is unquestionable that the charges are complex. They involve, among others, allegations of inducement to make a contract or arrangement containing a cartel provision and aiding and abetting such an offence (namely, that the former employee was complicit in the cartel conduct). These are alternative bases of criminal responsibility, each with its own legal principles. All that on top of criminal offences that are, by themselves, technical.
Were there too many pathways to guilt?
A critical thread in the defence argument about the complexity of the trial was that there were ‘thousands’ of alternative pathways to a finding of guilt. This would require the judge to give a complex suite of directions – including ‘extended unanimity directions’ – to the jury. The Full Court did not accept the case was as complex as claimed.
With specific exceptions, a jury must return a unanimous verdict on each charge.[3] This becomes complicated when there are alternative pathways to guilt within a particular charge. It is possible for one juror to find an accused guilty because of pathway ‘A’ and another juror to also find the accused guilty, but because of pathway ‘B’. In certain circumstances, a judge will provide an ‘extended unanimity direction’, asking the jury to be unanimous not only on their verdict, but also the pathway. This is to ensure a common foundation for the verdict.
Extended unanimity directions are used when there are alternative factual bases for liability. Whether one is required depends on the circumstances of the case: [78]. In Magnus v R,[4] the Court of Appeal of the Supreme Court of Victoria held:
Particulars contained in a charge ensure that an accused is given notice of the case against him […] Where there are multiple particulars, each of which may be sufficient to sustain the charge, and where the evidence leaves open the possibility of a finding that only one or some of the particulars have been established, a direction as to the need for unanimity will be required.
In Country Care, the prosecution alleged that 12 incidents made up the conduct element of the charge. Initially, the prosecutor said each incident could itself make out the offence. This was a natural trigger for an extended unanimity direction. However, the prosecution subsequently clarified that, for the purpose of proving the conduct element, it relied on a single, continuous course of conduct (made up by the 12 incidents). In those circumstances, there was no need for an extended unanimity direction: [94]. It was not essential to the chain of reasoning that a jury be satisfied of any of the individual incidents. The Full Court cautioned, however, that this could change depending on how the evidence plays out at trial.
By the time of appeal, the prosecution case regarding the ‘circumstance element’ – being that the conduct amounted to the making of a cartel agreement – also shifted. That element had sub-elements – in broad terms, did the provision have a price fixing purpose/was it likely to have a price fixing effect? Were at least two of the parties to the cartel agreement in competition in relation to the goods the subject of that likely effect? The prosecution initially put four alternative pathways for the purpose/effect sub-element, and alleged that numerous combinations of parties were relevantly in competition with each other, in different geographic areas, in relation to the relevant goods. This meant a handful of pathways for just one element of the offence. By the time of appeal, the prosecution had narrowed its allegations on purpose/effect, and during the appeal it clarified that it would only rely on a limited number of types of goods to prove the purpose/effect and competition sub-elements so far as they related to the circumstance (cf. the mental) element. The Full Court concluded that, with the prosecution’s case put on this basis, the extended unanimity directions required would not too be complex for the jury to follow: [114], [136] and [144].
Is a case of this kind too complex for a jury to understand?
Previous authorities have held that indictments containing too many allegations can be ‘unfair’ and ‘oppressive’.[5] This may be because there are too many charges or because of the cross-pollination of facts (particularly, the use of tendency reasoning). Much of it boils down to the capacity of the jury to understand and follow directions about the law given by the trial judge.
The defence argued that the charges on indictment should be severed because of the case’s complexity. This was principally because of the need for extended unanimity directions. The defence submitted that each alternative basis of liability was effectively a separate charge for the jury to consider.
The Full Court’s conclusions about extended unanimity directions had already taken some force out of the defence’s arguments about complexity generally. The Full Court accepted that the offences were complex, but the factual allegations were not: [156]. The Full Court did not accept that the prosecution case as a whole was impossibly or oppressively complex. Accordingly, it refused the application: [158]-[159].
Key lessons from the case
For prosecutors, there is a need to make difficult decisions about how a case is put to simplify it. There are countless options for how a charge can be put in a case like this. The greater the options, the more flexibility at trial. But also, the greater complexity. The Full Court could have easily allowed the application had the Crown not appropriately narrowed its case.
For defence, courts will not lightly accept that a case is unfairly or oppressively complex. Courts will be particularly suspicious if the position is overstated. In a telling comment, the Full Court said at [155]: ‘many of the submissions advanced by the accused tended to grossly exaggerate the complexity of the issues that will likely arise.’
[1] Criminal Procedure Act 2009 (Vic) s 141(4).
[2] Trial by judge-alone is unavailable: s 80 Australian Constitution.
[3] Juries Act 2000 (Vic) s 46.
[4] (2013) 41 VR 612 [46]-[47].
[5] In this case, the defence relied on R v Appleby (1996) 88 A Crim R 456 and Hughes v R (2017) 263 CLR 338 as examples.
