Cartel Conduct Explained: Avoiding Anti-Competitive Behaviour In Australia

Competing fairly is good for business and good for your customers. But if your business crosses the line into cartel conduct, you could face severe penalties, investigations and long‑lasting reputational damage.

The good news? With the right knowledge, policies and training, you can collaborate with others in legitimate ways and keep your operations on the right side of Australian competition law.

In this guide, we break down what cartel conduct is, how it commonly arises for small and medium businesses, the consequences, and practical steps to build a simple, effective competition compliance program.

What Is Cartel Conduct In Australia?

Cartel conduct is anti‑competitive behaviour that involves two or more competitors agreeing to reduce competition between them. Under the Competition and Consumer Act 2010 (Cth), serious cartel conduct can be both a civil contravention and a criminal offence.

The main cartel categories to understand are:

• Price Fixing: Agreements or understandings with a competitor about prices or price components (discounts, surcharges, fees, credit terms).
• Bid Rigging (Collusive Tendering): Coordinating who will win a tender, cover bidding, bid suppression or rotating winners.
• Market Sharing: Dividing customers, territories, types of products or services so competitors don’t truly compete.
• Output Restrictions: Agreeing to limit production, supply or capacity to influence price or availability.

It doesn’t need to be a signed contract to be a problem. A “meeting of minds” or an informal understanding can still be cartel conduct. Even casual conversations at industry events or in group chats can create risk if they influence competitive decisions.

What Are The Risks And Penalties For Cartel Conduct?

The Australian Competition and Consumer Commission (ACCC) actively investigates and prosecutes cartels. Penalties can be very significant.

• For companies: The greater of $50 million, three times the benefit, or 30% of turnover during the breach period (for criminal cartels, substantial fines and court orders also apply).
• For individuals: Up to 10 years’ imprisonment and substantial fines, as well as bans from managing corporations.

On top of legal penalties, you may face court orders, enforceable undertakings, damages claims and long‑term brand damage. Cartels often go hand‑in‑hand with other breaches (like misleading or deceptive conduct), so a single investigation can open multiple fronts. It’s worth revisiting how Section 18 of the Australian Consumer Law on misleading conduct and Section 29 on false or misleading representations interact with your marketing and sales practices.

Common Ways Businesses Accidentally Cross The Line

Most small and medium businesses don’t set out to form a cartel. Problems arise when normal collaboration drifts into prohibited territory. Watch for these high‑risk scenarios:

Industry Meetings And Social Chats

It’s fine to talk about general industry trends. But avoid sharing non‑public, competitively sensitive information with competitors, like future pricing, costs, margins, customer lists or capacity plans. Even “off‑the‑record” comments can create an understanding.

Benchmarking And “Clean Team” Projects

Independent benchmarking can be legitimate if properly structured. Risks arise if participants or facilitators share identifiable data, recent price plans or customer‑specific strategies. Use anonymised, aggregated and lagged data where possible, and set clear rules on what can’t be discussed.

Joint Tenders And Subcontracting

Partnering on complex projects can be efficient. But collusive tendering-like agreeing in advance who will submit a strong bid and who will “cover bid”-is unlawful. Keep bid decisions independent, document the genuine reasons for any collaboration, and avoid pre‑arranged bid outcomes.

Price Rise “Check‑Ins”

Calling a competitor to “see what everyone’s doing on price” is classic price fixing. Your pricing should be set unilaterally, based on your own costs and strategy. The same goes for coordinated surcharges, fees or changes to terms and conditions.

Customer And Territory Carve‑Ups

Agreeing not to poach each other’s customers, or to stick to certain postcodes, is market sharing. Even if done to “keep the peace,” it reduces competition and is prohibited.

Is Collaboration Ever Allowed? Authorisations, Exemptions And Safe Structures

Not all competitor collaboration is illegal. Some arrangements can deliver efficiencies or public benefits and may be lawful if structured correctly.

• Joint Ventures: True integration of resources and risk for a genuine project can be allowed. The details matter-have a clear scope, pro‑competitive rationale and documented governance.
• Collective Bargaining: Small businesses can, in some cases, collectively bargain with suppliers or customers under a class exemption or authorisation, provided conditions are met.
• ACCC Authorisation/Notification: For higher‑risk collaborations, seeking ACCC authorisation can provide protection where public benefits outweigh competitive detriments.

If you’re exploring a collaboration that might touch competitive decisions (price, capacity, customer allocation), it’s wise to speak with a consumer and competition lawyer early or consider an ACL consultation to assess risks and identify pathways (like authorisation) that can de‑risk the proposal.

Resale Price Maintenance: A Special Risk To Know

Resale price maintenance (RPM) is when a supplier tries to control the price at which its independent retailers or distributors resell goods or services. In Australia, RPM is generally prohibited unless you have ACCC authorisation.

Common RPM red flags include:

• Dictating the minimum retail price (or “no discounting” edicts)
• Withholding supply because a retailer discounted below a set price
• Requiring a retailer to advertise only at or above a minimum advertised price

You can recommend a retail price (RRP), but retailers must be free to set their own price. If you’re setting prices or promoting offers, ensure your advertised price practices and promotional terms align with competition and consumer law.

How To Build A Practical Competition Compliance Program

Compliance doesn’t need to be complex. A few simple steps, embedded into everyday operations, go a long way.

1) Adopt Clear Rules For Staff

• Competition Law Compliance Policy: Set out do’s and don’ts in plain English-especially around information sharing, industry events and contact with competitors.
• Staff Training: Short, regular training helps your team spot and avoid risky situations. Reinforce what to do if a competitor raises price or customer topics.
• Meeting Protocols: Use agendas, record minutes, and leave immediately if discussions veer into prohibited topics. Follow up in writing to object and confirm you did not agree.

Many businesses roll these rules into their broader Staff Handbook and onboarding.

2) Set Safe Information‑Sharing Practices

• Limit Sensitive Disclosures: Avoid sharing future pricing, margin, cost or capacity data with competitors.
• Use Independent Benchmarking Carefully: If benchmarking, insist on aggregated, anonymised, lagged data and stick to a documented protocol.
• Separate “Clean Teams” When Needed: Where collaboration needs some data exchange, use ring‑fenced teams and minimise what’s shared.

3) Tendering And Bid Integrity

• Independent Decisions: Prepare and submit bids independently. No “cover bidding,” bid suppression or turn‑taking.
• Subcontracting After The Fact: If the winner needs subcontractors, engage them after you’ve won-don’t pre‑arrange outcomes during the tender process.
• Audit Trail: Keep records of decisions and the commercial rationale in case questions arise later.

4) Supplier And Channel Management

• Avoid RPM: Do not set minimum resale prices or punish discounting. RRPs should be genuinely recommended.
• Contract Clauses: Include competition‑law compliance warranties with distributors and suppliers and clear rules for promotions and online pricing displays.

5) Marketing, Promotions And Representations

Cartel issues often travel with consumer law risks. Make sure your marketing claims and promotional mechanics comply with the ACL. Review your practices against misleading or deceptive conduct principles and the specific rules on false or misleading representations. If your team runs frequent sales or bundles, consider a quick process checklist to avoid common missteps.

6) Digital And Algorithmic Pricing Controls

Using dynamic pricing or third‑party pricing tools? Ensure you and any vendor don’t configure systems in a way that effectively coordinates prices with competitors. Build human oversight into algorithmic strategies, and set vendor obligations not to facilitate anti‑competitive outcomes.

7) Whistleblowing And Reporting Channels

Encourage staff to raise concerns early. A short, accessible process and an internal point of contact make a big difference. If you’re a company that must have one, keep your Whistleblower Policy current and train managers on how to escalate issues appropriately.

What Should You Do If You Suspect Cartel Conduct?

Act quickly, carefully and deliberately. Early steps can materially change your legal risk.

• Stop And Preserve: Immediately cease any potentially problematic conduct and preserve all relevant documents and communications.
• Get Legal Advice Under Privilege: Involve lawyers early so your internal fact‑finding can be protected by legal professional privilege where appropriate.
• Assess Immunity Or Cooperation Options: The ACCC has a cartel immunity policy-first in the door may receive immunity, subject to conditions. Timing matters.
• Manage Internal Messaging: Avoid broad emails. Keep communications factual, minimal and directed by legal counsel.
• Prepare For Regulator Contact: Ensure your team understands how to respond if the ACCC requests information or attends your premises.

Contracts And Policies That Support Competition Compliance

Documentation won’t replace good behaviour, but it sets expectations, reduces risk and helps you respond quickly if issues arise. Consider:

• Competition Law Compliance Policy: Clear, practical rules for staff when dealing with competitors, industry groups and pricing.
• Staff Handbook And Training Materials: Induction and refresher modules that make the rules part of daily operations, supported by your Staff Handbook.
• Supplier/Distributor Agreements: Clauses requiring compliance with competition law, marketing rules and data‑sharing protocols.
• Tendering And Procurement Policy: Internal rules covering bid preparation, contact with competitors and subcontracting decisions.
• Marketing Sign‑Off Process: A simple checklist and approval workflow aligned with ACL obligations, backed by access to a consumer law specialist when needed.
• Website And Advertising Governance: Controls to ensure price displays and offers comply with advertised price laws and are not misleading under Section 18.

If you’re refreshing your compliance program or investigating a specific risk area, booking an ACL consultation is a practical way to triage priorities and get tailored next steps.

Frequently Asked Questions

Can I Share Future Price Plans With My Competitor If It’s “Just For Context”?

No. Sharing future prices, margin, cost or capacity information with a competitor is high risk and can amount to price fixing or facilitating a cartel. Keep competitive decisions independent.

Are Recommended Retail Prices (RRPs) Legal?

Yes, you can recommend a retail price, but retailers must be free to set their own prices. Pressuring or penalising a retailer for discounting can be unlawful resale price maintenance.

We Want To Team Up For A Complex Tender-Is That Allowed?

Potentially. Genuine joint bids can be lawful where you need each other’s capabilities, but collusive tendering is not. Get advice on structuring the arrangement, document your rationale and keep decisions independent.

Do Small Businesses Really Get Investigated For Cartels?

Yes. The ACCC pursues cartel conduct across industries and business sizes. Small businesses are often involved through informal arrangements or industry “norms” that cross legal lines.

Key Takeaways

• Cartel conduct includes price fixing, bid rigging, market sharing and output restrictions between competitors, and it can carry severe civil and criminal penalties in Australia.
• Most risks arise in day‑to‑day moments-industry meetings, joint bids, benchmarking and supplier relationships-so simple rules and training make a big difference.
• Some collaboration is lawful (e.g. genuine joint ventures or collective bargaining), but structure and documentation matter and authorisation may be needed.
• Avoid resale price maintenance by keeping RRPs genuinely optional and not punishing discounting; ensure marketing and pricing comply with the ACL.
• A practical compliance program-policy, training, safe information sharing, tender protocols and contracts-helps prevent issues and supports fast responses.
• If you suspect a problem, stop the conduct, preserve records, seek legal advice under privilege and consider immunity or cooperation options promptly.

If you’d like a consultation on competition and consumer law risks for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.