A federal court in Australia convicted Japanese shipping company Nippon Yusen Kabushiki Kaisha (NYK) of criminal cartel conduct last week and ordered it to pay a fine of $25 million, the second-highest ever imposed under Australia’s Competition and Consumer Act 2010 (CCA).

The judgment marks the first successful prosecution under the criminal cartel provisions of the CCA.

Following an investigation by the Australian Competition and Consumer Commission (ACCC), the public prosecutor charged NYK with giving effect to cartel provisions in an arrangement or understanding with other shipping lines relating to the transportation of motor vehicles to Australia between 2009 and 2012.

NYK entered a guilty plea in July 2016 and cooperated with the ACCC investigation. In November 2016, prosecutors brought charges against Kawasaki Kisen Kaisha (K Line), another alleged participant in the cartel. ACCC’s investigation of other alleged cartel participants is continuing.

The cartel operated from at least February 1997 and affected vehicles transported to Australia by NYK and other shipping lines from locations in Asia, the US and Europe on behalf of major car manufacturers including Nissan, Suzuki, Honda, Toyota, and Mazda.

“The Australian community relies heavily on imported vehicles, so a longstanding cartel in relation to the transportation of those vehicles to Australia was of significant concern,” said ACCC Chairman Rod Sims. “The NYK fine is also the second largest ever imposed under the Competition and Consumer Act, and incorporated a significant discount for NYK’s plea and cooperation.”

The presiding judge stated the fine “incorporates a global discount of 50 percent for NYK’s early plea of guilty and past and future assistance and cooperation, together with the contrition inherent in the early plea and cooperation: meaning that but for the early plea and past and future cooperation, the fine would have been $50 million.”

In this case, the maximum penalty was calculated on the basis of 10 per cent of NYK’s annual turnover in connection with Australia, in the 12 months prior to the commencement of the offence. On that basis, NYK’s conduct attracted a maximum penalty of $100 million.

“Cartel conduct of the sort engaged in by NYK warrants denunciation and condign punishment,” the judge said, because “it is ultimately detrimental to, or at least likely to be detrimental to, Australian businesses and consumers. The penalty imposed on NYK should send a powerful message to multinational corporations that conduct business in Australia that anti-competitive conduct will not be tolerated and will be dealt with harshly.”